Correlation Between Novatek Microelectronics and HUA YU
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and HUA YU 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 HUA YU 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 HUA YU LIEN, you can compare the effects of market volatilities on Novatek Microelectronics and HUA YU 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 HUA YU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and HUA YU.
Diversification Opportunities for Novatek Microelectronics and HUA YU
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novatek and HUA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and HUA YU LIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUA YU LIEN 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 HUA YU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUA YU LIEN has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and HUA YU go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and HUA YU
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 0.67 times more return on investment than HUA YU. However, Novatek Microelectronics Corp is 1.5 times less risky than HUA YU. It trades about -0.08 of its potential returns per unit of risk. HUA YU LIEN is currently generating about -0.14 per unit of risk. If you would invest 49,250 in Novatek Microelectronics Corp on September 5, 2024 and sell it today you would lose (1,300) from holding Novatek Microelectronics Corp or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. HUA YU LIEN
Performance |
| Timeline |
| Novatek Microelectronics |
| HUA YU LIEN |
Novatek Microelectronics and HUA YU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and HUA YU
The main advantage of trading using opposite Novatek Microelectronics and HUA YU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, HUA YU 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 HUA YU will offset losses from the drop in HUA YU's long position.| Novatek Microelectronics vs. Phytohealth Corp | Novatek Microelectronics vs. Healthconn Corp | Novatek Microelectronics vs. SS Healthcare Holding | Novatek Microelectronics vs. Pacific Hospital Supply |
| HUA YU vs. Advancetek Enterprise Co | HUA YU vs. GTM Holdings Corp | HUA YU vs. De Licacy Industrial | HUA YU vs. Shinkong Textile 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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