Correlation Between Novatek Microelectronics and YungShin Global
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and YungShin Global 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 YungShin Global 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 YungShin Global Holding, you can compare the effects of market volatilities on Novatek Microelectronics and YungShin Global 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 YungShin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and YungShin Global.
Diversification Opportunities for Novatek Microelectronics and YungShin Global
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Novatek and YungShin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and YungShin Global Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YungShin Global Holding 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 YungShin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YungShin Global Holding has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and YungShin Global go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and YungShin Global
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to under-perform the YungShin Global. In addition to that, Novatek Microelectronics is 1.04 times more volatile than YungShin Global Holding. It trades about -0.1 of its total potential returns per unit of risk. YungShin Global Holding is currently generating about 0.02 per unit of volatility. If you would invest 5,370 in YungShin Global Holding on September 12, 2024 and sell it today you would earn a total of 150.00 from holding YungShin Global Holding or generate 2.79% 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. YungShin Global Holding
Performance |
| Timeline |
| Novatek Microelectronics |
| YungShin Global Holding |
Novatek Microelectronics and YungShin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and YungShin Global
The main advantage of trading using opposite Novatek Microelectronics and YungShin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, YungShin Global 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 YungShin Global will offset losses from the drop in YungShin Global's long position.The idea behind Novatek Microelectronics Corp and YungShin Global Holding 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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