Correlation Between Novatek Microelectronics and Stark Technology
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Stark Technology 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 Stark Technology 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 Stark Technology, you can compare the effects of market volatilities on Novatek Microelectronics and Stark Technology 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 Stark Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Stark Technology.
Diversification Opportunities for Novatek Microelectronics and Stark Technology
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Novatek and Stark is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Stark Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stark Technology 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 Stark Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stark Technology has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Stark Technology go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Stark Technology
Assuming the 90 days trading horizon Novatek Microelectronics is expected to generate 1.19 times less return on investment than Stark Technology. In addition to that, Novatek Microelectronics is 1.22 times more volatile than Stark Technology. It trades about 0.16 of its total potential returns per unit of risk. Stark Technology is currently generating about 0.24 per unit of volatility. If you would invest 13,650 in Stark Technology on October 31, 2024 and sell it today you would earn a total of 800.00 from holding Stark Technology or generate 5.86% 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. Stark Technology
Performance |
| Timeline |
| Novatek Microelectronics |
| Stark Technology |
Novatek Microelectronics and Stark Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Stark Technology
The main advantage of trading using opposite Novatek Microelectronics and Stark Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Stark Technology 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 Stark Technology will offset losses from the drop in Stark Technology's long position.| Novatek Microelectronics vs. CTBC Financial Holding | Novatek Microelectronics vs. O Bank Co | Novatek Microelectronics vs. Thinking Electronic Industrial | Novatek Microelectronics vs. Bank of Kaohsiung |
| Stark Technology vs. Micro Star International Co | Stark Technology vs. Synnex Technology International | Stark Technology vs. Gigabyte Technology Co | Stark Technology vs. Realtek Semiconductor 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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