Correlation Between Novatek Microelectronics and Yi Jinn
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Yi Jinn 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 Yi Jinn 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 Yi Jinn Industrial, you can compare the effects of market volatilities on Novatek Microelectronics and Yi Jinn 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 Yi Jinn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Yi Jinn.
Diversification Opportunities for Novatek Microelectronics and Yi Jinn
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Novatek and 1457 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Yi Jinn Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yi Jinn Industrial 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 Yi Jinn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yi Jinn Industrial has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Yi Jinn go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Yi Jinn
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 1.63 times more return on investment than Yi Jinn. However, Novatek Microelectronics is 1.63 times more volatile than Yi Jinn Industrial. It trades about 0.06 of its potential returns per unit of risk. Yi Jinn Industrial is currently generating about 0.01 per unit of risk. If you would invest 29,550 in Novatek Microelectronics Corp on September 3, 2024 and sell it today you would earn a total of 18,850 from holding Novatek Microelectronics Corp or generate 63.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Yi Jinn Industrial
Performance |
| Timeline |
| Novatek Microelectronics |
| Yi Jinn Industrial |
Novatek Microelectronics and Yi Jinn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Yi Jinn
The main advantage of trading using opposite Novatek Microelectronics and Yi Jinn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Yi Jinn 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 Yi Jinn will offset losses from the drop in Yi Jinn'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 |
| Yi Jinn vs. Tainan Spinning Co | Yi Jinn vs. Chia Her Industrial | Yi Jinn vs. WiseChip Semiconductor | Yi Jinn 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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