Correlation Between Novatek Microelectronics and General Interface
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and General Interface 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 General Interface 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 General Interface Solution, you can compare the effects of market volatilities on Novatek Microelectronics and General Interface 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 General Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and General Interface.
Diversification Opportunities for Novatek Microelectronics and General Interface
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Novatek and General is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and General Interface Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Interface 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 General Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Interface has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and General Interface go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and General Interface
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 0.72 times more return on investment than General Interface. However, Novatek Microelectronics Corp is 1.39 times less risky than General Interface. It trades about -0.14 of its potential returns per unit of risk. General Interface Solution is currently generating about -0.29 per unit of risk. If you would invest 50,400 in Novatek Microelectronics Corp on August 30, 2024 and sell it today you would lose (2,250) from holding Novatek Microelectronics Corp or give up 4.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. General Interface Solution
Performance |
| Timeline |
| Novatek Microelectronics |
| General Interface |
Novatek Microelectronics and General Interface Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and General Interface
The main advantage of trading using opposite Novatek Microelectronics and General Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, General Interface 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 General Interface will offset losses from the drop in General Interface's long position.The idea behind Novatek Microelectronics Corp and General Interface Solution 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.
| General Interface vs. Zhen Ding Technology | General Interface vs. TPK Holding Co | General Interface vs. Catcher Technology Co | General Interface vs. Flexium Interconnect |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |