Correlation Between Novatek Microelectronics and Andes Technology
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Andes 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 Andes 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 Andes Technology Corp, you can compare the effects of market volatilities on Novatek Microelectronics and Andes 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 Andes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Andes Technology.
Diversification Opportunities for Novatek Microelectronics and Andes Technology
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novatek and Andes is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Andes Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andes Technology Corp 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 Andes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andes Technology Corp has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Andes Technology go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Andes Technology
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to under-perform the Andes Technology. But the stock apears to be less risky and, when comparing its historical volatility, Novatek Microelectronics Corp is 1.59 times less risky than Andes Technology. The stock trades about -0.25 of its potential returns per unit of risk. The Andes Technology Corp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 39,600 in Andes Technology Corp on August 25, 2024 and sell it today you would lose (2,350) from holding Andes Technology Corp or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Andes Technology Corp
Performance |
| Timeline |
| Novatek Microelectronics |
| Andes Technology Corp |
Novatek Microelectronics and Andes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Andes Technology
The main advantage of trading using opposite Novatek Microelectronics and Andes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Andes 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 Andes Technology will offset losses from the drop in Andes Technology's long position.| Novatek Microelectronics vs. MediaTek | Novatek Microelectronics vs. Quanta Computer | Novatek Microelectronics vs. United Microelectronics |
| Andes Technology vs. Global Unichip Corp | Andes Technology vs. Asmedia Technology | Andes Technology vs. Unimicron Technology Corp | Andes Technology 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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