Correlation Between Chung Hung and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Chung Hung and Novatek Microelectronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chung Hung and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hung Steel and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Chung Hung and Novatek Microelectronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chung Hung with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Novatek Microelectronics.
Diversification Opportunities for Chung Hung and Novatek Microelectronics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chung and Novatek is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Chung Hung is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chung Hung Steel are associated (or correlated) with Novatek Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novatek Microelectronics has no effect on the direction of Chung Hung i.e., Chung Hung and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Chung Hung and Novatek Microelectronics
Assuming the 90 days trading horizon Chung Hung Steel is expected to generate 1.55 times more return on investment than Novatek Microelectronics. However, Chung Hung is 1.55 times more volatile than Novatek Microelectronics Corp. It trades about -0.03 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about -0.14 per unit of risk. If you would invest 2,060 in Chung Hung Steel on August 30, 2024 and sell it today you would lose (35.00) from holding Chung Hung Steel or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hung Steel vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Chung Hung Steel |
| Novatek Microelectronics |
Chung Hung and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hung and Novatek Microelectronics
The main advantage of trading using opposite Chung Hung and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Novatek Microelectronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Novatek Microelectronics will offset losses from the drop in Novatek Microelectronics' long position.| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
| Novatek Microelectronics vs. Sitronix Technology Corp | Novatek Microelectronics vs. Elan Microelectronics Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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