Correlation Between Novatek Microelectronics and E Ink
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and E Ink 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 E Ink 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 E Ink Holdings, you can compare the effects of market volatilities on Novatek Microelectronics and E Ink 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 E Ink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and E Ink.
Diversification Opportunities for Novatek Microelectronics and E Ink
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Novatek and 8069 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and E Ink Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Ink Holdings 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 E Ink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Ink Holdings has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and E Ink go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and E Ink
Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 0.27 times more return on investment than E Ink. However, Novatek Microelectronics Corp is 3.74 times less risky than E Ink. It trades about 0.25 of its potential returns per unit of risk. E Ink Holdings is currently generating about -0.07 per unit of risk. If you would invest 53,400 in Novatek Microelectronics Corp on November 28, 2024 and sell it today you would earn a total of 1,800 from holding Novatek Microelectronics Corp or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. E Ink Holdings
Performance |
| Timeline |
| Novatek Microelectronics |
| E Ink Holdings |
Novatek Microelectronics and E Ink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and E Ink
The main advantage of trading using opposite Novatek Microelectronics and E Ink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, E Ink 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 E Ink will offset losses from the drop in E Ink's long position.The idea behind Novatek Microelectronics Corp and E Ink Holdings 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.
| E Ink vs. Unimicron Technology Corp | E Ink vs. Innolux Corp | E Ink vs. Delta Electronics | E Ink 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |