Correlation Between Chicony Electronics and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Chicony Electronics 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 Chicony Electronics and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chicony Electronics Co and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Chicony Electronics 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 Chicony Electronics with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicony Electronics and Novatek Microelectronics.
Diversification Opportunities for Chicony Electronics and Novatek Microelectronics
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chicony and Novatek is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Electronics 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 Chicony Electronics 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 Chicony Electronics 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 Chicony Electronics i.e., Chicony Electronics and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Chicony Electronics and Novatek Microelectronics
Assuming the 90 days trading horizon Chicony Electronics Co is expected to generate 1.26 times more return on investment than Novatek Microelectronics. However, Chicony Electronics is 1.26 times more volatile than Novatek Microelectronics Corp. It trades about 0.06 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.03 per unit of risk. If you would invest 11,650 in Chicony Electronics Co on August 29, 2024 and sell it today you would earn a total of 4,050 from holding Chicony Electronics Co or generate 34.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chicony Electronics Co vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Chicony Electronics |
| Novatek Microelectronics |
Chicony Electronics and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chicony Electronics and Novatek Microelectronics
The main advantage of trading using opposite Chicony Electronics and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicony Electronics 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.| Chicony Electronics vs. Lite On Technology Corp | Chicony Electronics vs. Inventec Corp | Chicony Electronics vs. Compal Electronics | Chicony Electronics vs. Synnex Technology International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |