Correlation Between Novatek Microelectronics and Thermaltake Technology
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Thermaltake 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 Thermaltake 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 Thermaltake Technology Co, you can compare the effects of market volatilities on Novatek Microelectronics and Thermaltake 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 Thermaltake Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Thermaltake Technology.
Diversification Opportunities for Novatek Microelectronics and Thermaltake Technology
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Novatek and Thermaltake is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Thermaltake Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermaltake 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 Thermaltake Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermaltake Technology has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Thermaltake Technology go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Thermaltake Technology
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to under-perform the Thermaltake Technology. But the stock apears to be less risky and, when comparing its historical volatility, Novatek Microelectronics Corp is 1.51 times less risky than Thermaltake Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Thermaltake Technology Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,695 in Thermaltake Technology Co on September 3, 2024 and sell it today you would lose (15.00) from holding Thermaltake Technology Co or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Thermaltake Technology Co
Performance |
| Timeline |
| Novatek Microelectronics |
| Thermaltake Technology |
Novatek Microelectronics and Thermaltake Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Thermaltake Technology
The main advantage of trading using opposite Novatek Microelectronics and Thermaltake Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Thermaltake 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 Thermaltake Technology will offset losses from the drop in Thermaltake Technology'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 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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