Correlation Between Novatek Microelectronics and King Yuan
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and King Yuan 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 King Yuan 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 King Yuan Electronics, you can compare the effects of market volatilities on Novatek Microelectronics and King Yuan 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 King Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and King Yuan.
Diversification Opportunities for Novatek Microelectronics and King Yuan
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novatek and King is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and King Yuan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Yuan 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 King Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Yuan Electronics has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and King Yuan go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and King Yuan
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to under-perform the King Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Novatek Microelectronics Corp is 1.71 times less risky than King Yuan. The stock trades about -0.24 of its potential returns per unit of risk. The King Yuan Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13,000 in King Yuan Electronics on August 25, 2024 and sell it today you would earn a total of 0.00 from holding King Yuan Electronics or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. King Yuan Electronics
Performance |
| Timeline |
| Novatek Microelectronics |
| King Yuan Electronics |
Novatek Microelectronics and King Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and King Yuan
The main advantage of trading using opposite Novatek Microelectronics and King Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, King Yuan 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 King Yuan will offset losses from the drop in King Yuan's long position.The idea behind Novatek Microelectronics Corp and King Yuan Electronics 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.| King Yuan vs. Powertech Technology | King Yuan vs. Novatek Microelectronics Corp | King Yuan vs. Greatek Electronics | King Yuan vs. Nanya Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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