Correlation Between Novatek Microelectronics and Macroblock
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Macroblock 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 Macroblock 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 Macroblock, you can compare the effects of market volatilities on Novatek Microelectronics and Macroblock 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 Macroblock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Macroblock.
Diversification Opportunities for Novatek Microelectronics and Macroblock
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novatek and Macroblock is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Macroblock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macroblock 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 Macroblock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macroblock has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Macroblock go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Macroblock
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 1.04 times more return on investment than Macroblock. However, Novatek Microelectronics is 1.04 times more volatile than Macroblock. It trades about -0.08 of its potential returns per unit of risk. Macroblock is currently generating about -0.28 per unit of risk. If you would invest 49,250 in Novatek Microelectronics Corp on September 5, 2024 and sell it today you would lose (1,300) from holding Novatek Microelectronics Corp or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Macroblock
Performance |
| Timeline |
| Novatek Microelectronics |
| Macroblock |
Novatek Microelectronics and Macroblock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Macroblock
The main advantage of trading using opposite Novatek Microelectronics and Macroblock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Macroblock 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 Macroblock will offset losses from the drop in Macroblock's long position.| Novatek Microelectronics vs. Phytohealth Corp | Novatek Microelectronics vs. Healthconn Corp | Novatek Microelectronics vs. SS Healthcare Holding | Novatek Microelectronics vs. Pacific Hospital Supply |
| Macroblock vs. Skardin Industrial | Macroblock vs. Feng Ching Metal | Macroblock vs. Great China Metal | Macroblock vs. De Licacy Industrial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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