Correlation Between Novatek Microelectronics and Tong Yang
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Tong Yang 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 Novatek Microelectronics and Tong Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novatek Microelectronics Corp and Tong Yang Industry, you can compare the effects of market volatilities on Novatek Microelectronics and Tong Yang 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 Novatek Microelectronics with a short position of Tong Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Tong Yang.
Diversification Opportunities for Novatek Microelectronics and Tong Yang
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Novatek and Tong is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Tong Yang Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Yang Industry and Novatek Microelectronics 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 Novatek Microelectronics Corp are associated (or correlated) with Tong Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Yang Industry has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Tong Yang go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Tong Yang
Assuming the 90 days trading horizon Novatek Microelectronics is expected to generate 1.82 times less return on investment than Tong Yang. But when comparing it to its historical volatility, Novatek Microelectronics Corp is 1.27 times less risky than Tong Yang. It trades about 0.06 of its potential returns per unit of risk. Tong Yang Industry is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,735 in Tong Yang Industry on September 3, 2024 and sell it today you would earn a total of 7,115 from holding Tong Yang Industry or generate 150.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Tong Yang Industry
Performance |
| Timeline |
| Novatek Microelectronics |
| Tong Yang Industry |
Novatek Microelectronics and Tong Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Tong Yang
The main advantage of trading using opposite Novatek Microelectronics and Tong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Tong Yang 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 Tong Yang will offset losses from the drop in Tong Yang's long position.| Novatek Microelectronics vs. First Hotel Co | Novatek Microelectronics vs. BenQ Materials Corp | Novatek Microelectronics vs. FarGlory Hotel Co | Novatek Microelectronics vs. Grand Plastic Technology |
| Tong Yang vs. Tainan Spinning Co | Tong Yang vs. Chia Her Industrial | Tong Yang vs. WiseChip Semiconductor | Tong Yang vs. Novatek Microelectronics Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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