Correlation Between Novatek Microelectronics and Standard Chemical
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Standard Chemical 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 Standard Chemical 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 Standard Chemical Pharmaceutical, you can compare the effects of market volatilities on Novatek Microelectronics and Standard Chemical 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 Standard Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Standard Chemical.
Diversification Opportunities for Novatek Microelectronics and Standard Chemical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novatek and Standard is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Standard Chemical Pharmaceutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Chemical 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 Standard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Chemical has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Standard Chemical go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Standard Chemical
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to under-perform the Standard Chemical. In addition to that, Novatek Microelectronics is 1.66 times more volatile than Standard Chemical Pharmaceutical. It trades about -0.05 of its total potential returns per unit of risk. Standard Chemical Pharmaceutical is currently generating about 0.14 per unit of volatility. If you would invest 6,330 in Standard Chemical Pharmaceutical on September 3, 2024 and sell it today you would earn a total of 160.00 from holding Standard Chemical Pharmaceutical or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Standard Chemical Pharmaceutic
Performance |
| Timeline |
| Novatek Microelectronics |
| Standard Chemical |
Novatek Microelectronics and Standard Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Standard Chemical
The main advantage of trading using opposite Novatek Microelectronics and Standard Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Standard Chemical 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 Standard Chemical will offset losses from the drop in Standard Chemical'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 |
| Standard Chemical vs. Sinphar Pharmaceutical Co | Standard Chemical vs. Apex Biotechnology Corp | Standard Chemical vs. WiseChip Semiconductor | Standard Chemical 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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