Correlation Between Gigabyte Technology and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Gigabyte Technology 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 Gigabyte Technology and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gigabyte Technology Co and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Gigabyte Technology 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 Gigabyte Technology with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gigabyte Technology and Novatek Microelectronics.
Diversification Opportunities for Gigabyte Technology and Novatek Microelectronics
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gigabyte and Novatek is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gigabyte Technology Co and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Gigabyte Technology 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 Gigabyte Technology Co 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 Gigabyte Technology i.e., Gigabyte Technology and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Gigabyte Technology and Novatek Microelectronics
Assuming the 90 days trading horizon Gigabyte Technology Co is expected to generate 1.61 times more return on investment than Novatek Microelectronics. However, Gigabyte Technology is 1.61 times more volatile than Novatek Microelectronics Corp. It trades about 0.09 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.06 per unit of risk. If you would invest 10,140 in Gigabyte Technology Co on August 27, 2024 and sell it today you would earn a total of 18,010 from holding Gigabyte Technology Co or generate 177.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Gigabyte Technology Co vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Gigabyte Technology |
| Novatek Microelectronics |
Gigabyte Technology and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gigabyte Technology and Novatek Microelectronics
The main advantage of trading using opposite Gigabyte Technology and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gigabyte Technology 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.| Gigabyte Technology vs. Micro Star International Co | Gigabyte Technology vs. Asustek Computer | Gigabyte Technology vs. Quanta Computer | Gigabyte Technology vs. Compal Electronics |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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