Correlation Between Ta Chen and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Ta Chen 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 Ta Chen and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Chen Stainless and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Ta Chen 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 Ta Chen with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Chen and Novatek Microelectronics.
Diversification Opportunities for Ta Chen and Novatek Microelectronics
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 2027 and Novatek is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ta Chen Stainless and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Ta Chen 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 Ta Chen Stainless 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 Ta Chen i.e., Ta Chen and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Ta Chen and Novatek Microelectronics
Assuming the 90 days trading horizon Ta Chen Stainless is expected to generate 1.69 times more return on investment than Novatek Microelectronics. However, Ta Chen is 1.69 times more volatile than Novatek Microelectronics Corp. It trades about 0.15 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 3,280 in Ta Chen Stainless on August 30, 2024 and sell it today you would earn a total of 240.00 from holding Ta Chen Stainless or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ta Chen Stainless vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Ta Chen Stainless |
| Novatek Microelectronics |
Ta Chen and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Chen and Novatek Microelectronics
The main advantage of trading using opposite Ta Chen and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Chen 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.| Ta Chen vs. Chung Hung Steel | Ta Chen vs. China Steel Corp | Ta Chen vs. Tung Ho Steel | Ta Chen 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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