Correlation Between Novatek Microelectronics and Launch Technologies
Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Launch Technologies 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 Launch Technologies 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 Launch Technologies Co, you can compare the effects of market volatilities on Novatek Microelectronics and Launch Technologies 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 Launch Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Launch Technologies.
Diversification Opportunities for Novatek Microelectronics and Launch Technologies
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Novatek and Launch is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Launch Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch Technologies 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 Launch Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch Technologies has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Launch Technologies go up and down completely randomly.
Pair Corralation between Novatek Microelectronics and Launch Technologies
If you would invest 0.00 in Launch Technologies Co on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Launch Technologies Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Novatek Microelectronics Corp vs. Launch Technologies Co
Performance |
| Timeline |
| Novatek Microelectronics |
| Launch Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Novatek Microelectronics and Launch Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novatek Microelectronics and Launch Technologies
The main advantage of trading using opposite Novatek Microelectronics and Launch Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novatek Microelectronics position performs unexpectedly, Launch Technologies 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 Launch Technologies will offset losses from the drop in Launch Technologies' long position.The idea behind Novatek Microelectronics Corp and Launch Technologies Co 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.
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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