Correlation Between Novatek Microelectronics and Fitipower Integrated
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Fitipower Integrated 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 Fitipower Integrated 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 Fitipower Integrated Technology, you can compare the effects of market volatilities on Novatek Microelectronics and Fitipower Integrated 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 Fitipower Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Fitipower Integrated.
Diversification Opportunities for Novatek Microelectronics and Fitipower Integrated
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Novatek and Fitipower is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Fitipower Integrated Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fitipower Integrated 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 Fitipower Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fitipower Integrated has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Fitipower Integrated go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Fitipower Integrated
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 0.55 times more return on investment than Fitipower Integrated. However, Novatek Microelectronics Corp is 1.83 times less risky than Fitipower Integrated. It trades about -0.24 of its potential returns per unit of risk. Fitipower Integrated Technology is currently generating about -0.25 per unit of risk. If you would invest 51,700 in Novatek Microelectronics Corp on August 25, 2024 and sell it today you would lose (3,700) from holding Novatek Microelectronics Corp or give up 7.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Fitipower Integrated Technolog
Performance |
| Timeline |
| Novatek Microelectronics |
| Fitipower Integrated |
Novatek Microelectronics and Fitipower Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Fitipower Integrated
The main advantage of trading using opposite Novatek Microelectronics and Fitipower Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Fitipower Integrated 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 Fitipower Integrated will offset losses from the drop in Fitipower Integrated's long position.The idea behind Novatek Microelectronics Corp and Fitipower Integrated Technology 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.| Fitipower Integrated vs. FocalTech Systems Co | Fitipower Integrated vs. Novatek Microelectronics Corp | Fitipower Integrated vs. Sitronix Technology Corp | Fitipower Integrated vs. AP Memory 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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