Correlation Between Novatek Microelectronics and U Media
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and U Media 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 U Media 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 U Media Communications, you can compare the effects of market volatilities on Novatek Microelectronics and U Media 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 U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and U Media.
Diversification Opportunities for Novatek Microelectronics and U Media
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Novatek and 6470 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications 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 U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and U Media go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and U Media
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 0.88 times more return on investment than U Media. However, Novatek Microelectronics Corp is 1.14 times less risky than U Media. It trades about 0.06 of its potential returns per unit of risk. U Media Communications is currently generating about 0.03 per unit of risk. If you would invest 30,200 in Novatek Microelectronics Corp on September 12, 2024 and sell it today you would earn a total of 18,650 from holding Novatek Microelectronics Corp or generate 61.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. U Media Communications
Performance |
| Timeline |
| Novatek Microelectronics |
| U Media Communications |
Novatek Microelectronics and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and U Media
The main advantage of trading using opposite Novatek Microelectronics and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, U Media 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 U Media will offset losses from the drop in U Media's long position.The idea behind Novatek Microelectronics Corp and U Media Communications 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.
| U Media vs. Gemtek Technology Co | U Media vs. Ruentex Development Co | U Media vs. WiseChip Semiconductor | U Media vs. Novatek Microelectronics Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |