Correlation Between Novatek Microelectronics and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Merry Electronics 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 Merry Electronics 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 Merry Electronics Co, you can compare the effects of market volatilities on Novatek Microelectronics and Merry Electronics 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 Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Merry Electronics.
Diversification Opportunities for Novatek Microelectronics and Merry Electronics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Novatek and Merry is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics 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 Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Merry Electronics go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Merry Electronics
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 1.09 times more return on investment than Merry Electronics. However, Novatek Microelectronics is 1.09 times more volatile than Merry Electronics Co. It trades about 0.18 of its potential returns per unit of risk. Merry Electronics Co is currently generating about -0.02 per unit of risk. If you would invest 49,450 in Novatek Microelectronics Corp on October 25, 2024 and sell it today you would earn a total of 2,950 from holding Novatek Microelectronics Corp or generate 5.97% 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. Merry Electronics Co
Performance |
| Timeline |
| Novatek Microelectronics |
| Merry Electronics |
Novatek Microelectronics and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Merry Electronics
The main advantage of trading using opposite Novatek Microelectronics and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.The idea behind Novatek Microelectronics Corp and Merry Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Merry Electronics vs. Unimicron Technology Corp | Merry Electronics vs. Kinsus Interconnect Technology | Merry Electronics vs. Novatek Microelectronics Corp | Merry Electronics vs. Delta Electronics |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |