Correlation Between NOVATECH and Humax
Can any of the company-specific risk be diversified away by investing in both NOVATECH and Humax 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 NOVATECH and Humax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVATECH Co and Humax Co, you can compare the effects of market volatilities on NOVATECH and Humax 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 NOVATECH with a short position of Humax. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and Humax.
Diversification Opportunities for NOVATECH and Humax
Very good diversification
The 3 months correlation between NOVATECH and Humax is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH Co and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax and NOVATECH 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 NOVATECH Co are associated (or correlated) with Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of NOVATECH i.e., NOVATECH and Humax go up and down completely randomly.
Pair Corralation between NOVATECH and Humax
Assuming the 90 days trading horizon NOVATECH Co is expected to generate 1.3 times more return on investment than Humax. However, NOVATECH is 1.3 times more volatile than Humax Co. It trades about 0.0 of its potential returns per unit of risk. Humax Co is currently generating about -0.07 per unit of risk. If you would invest 2,523,108 in NOVATECH Co on November 2, 2024 and sell it today you would lose (584,108) from holding NOVATECH Co or give up 23.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOVATECH Co vs. Humax Co
Performance |
| Timeline |
| NOVATECH |
| Humax |
NOVATECH and Humax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVATECH and Humax
The main advantage of trading using opposite NOVATECH and Humax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH position performs unexpectedly, Humax 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 Humax will offset losses from the drop in Humax's long position.| NOVATECH vs. Miwon Chemicals Co | NOVATECH vs. Bosung Power Technology | NOVATECH vs. Clean Science co | NOVATECH vs. Kukdong Oil Chemicals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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