Correlation Between Chicony Electronics and Nova Technology
Can any of the company-specific risk be diversified away by investing in both Chicony Electronics and Nova Technology 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 Nova Technology 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 Nova Technology, you can compare the effects of market volatilities on Chicony Electronics and Nova Technology 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 Nova Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicony Electronics and Nova Technology.
Diversification Opportunities for Chicony Electronics and Nova Technology
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chicony and Nova is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Electronics Co and Nova Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Technology 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 Nova Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Technology has no effect on the direction of Chicony Electronics i.e., Chicony Electronics and Nova Technology go up and down completely randomly.
Pair Corralation between Chicony Electronics and Nova Technology
Assuming the 90 days trading horizon Chicony Electronics Co is expected to under-perform the Nova Technology. But the stock apears to be less risky and, when comparing its historical volatility, Chicony Electronics Co is 1.04 times less risky than Nova Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Nova Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 18,650 in Nova Technology on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Nova Technology or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chicony Electronics Co vs. Nova Technology
Performance |
| Timeline |
| Chicony Electronics |
| Nova Technology |
Chicony Electronics and Nova Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chicony Electronics and Nova Technology
The main advantage of trading using opposite Chicony Electronics and Nova Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicony Electronics position performs unexpectedly, Nova Technology 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 Nova Technology will offset losses from the drop in Nova Technology's long position.The idea behind Chicony Electronics Co and Nova Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nova Technology vs. Golden Friends | Nova Technology vs. Sunonwealth Electric Machine | Nova Technology vs. Rechi Precision Co | Nova Technology vs. Fittech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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