Correlation Between Century Wind and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Century Wind 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 Century Wind and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Century Wind 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 Century Wind with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and Novatek Microelectronics.
Diversification Opportunities for Century Wind and Novatek Microelectronics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Novatek is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Century Wind 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 Century Wind Power 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 Century Wind i.e., Century Wind and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Century Wind and Novatek Microelectronics
Assuming the 90 days trading horizon Century Wind Power is expected to under-perform the Novatek Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Century Wind Power is 1.23 times less risky than Novatek Microelectronics. The stock trades about 0.0 of its potential returns per unit of risk. The Novatek Microelectronics Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 48,350 in Novatek Microelectronics Corp on September 22, 2024 and sell it today you would earn a total of 300.00 from holding Novatek Microelectronics Corp or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Wind Power vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Century Wind Power |
| Novatek Microelectronics |
Century Wind and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Wind and Novatek Microelectronics
The main advantage of trading using opposite Century Wind and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind 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.| Century Wind vs. Ruentex Development Co | Century Wind vs. United Integrated Services | Century Wind vs. CTCI Corp | Century Wind vs. Continental Holdings Corp |
| Novatek Microelectronics vs. Century Wind Power | Novatek Microelectronics vs. Green World Fintech | Novatek Microelectronics vs. Ingentec | Novatek Microelectronics vs. Chaheng Precision Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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