Correlation Between Novatek Microelectronics and Ta Liang
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Ta Liang 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 Ta Liang 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 Ta Liang Technology, you can compare the effects of market volatilities on Novatek Microelectronics and Ta Liang 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 Ta Liang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Ta Liang.
Diversification Opportunities for Novatek Microelectronics and Ta Liang
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novatek and 3167 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Ta Liang Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Liang 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 Ta Liang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Liang Technology has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Ta Liang go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Ta Liang
Assuming the 90 days trading horizon Novatek Microelectronics is expected to generate 2.12 times less return on investment than Ta Liang. But when comparing it to its historical volatility, Novatek Microelectronics Corp is 1.64 times less risky than Ta Liang. It trades about 0.06 of its potential returns per unit of risk. Ta Liang Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,240 in Ta Liang Technology on September 3, 2024 and sell it today you would earn a total of 7,310 from holding Ta Liang Technology or generate 172.41% 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. Ta Liang Technology
Performance |
| Timeline |
| Novatek Microelectronics |
| Ta Liang Technology |
Novatek Microelectronics and Ta Liang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Ta Liang
The main advantage of trading using opposite Novatek Microelectronics and Ta Liang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Ta Liang 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 Ta Liang will offset losses from the drop in Ta Liang'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 |
| Ta Liang vs. Highlight Tech | Ta Liang vs. WiseChip Semiconductor | Ta Liang vs. Novatek Microelectronics Corp | Ta Liang vs. Leader 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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