Correlation Between Emerging Display and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Emerging Display and Novatek Microelectronics 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 Emerging Display and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Display Technologies and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Emerging Display and Novatek Microelectronics 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 Emerging Display with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Display and Novatek Microelectronics.
Diversification Opportunities for Emerging Display and Novatek Microelectronics
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerging and Novatek is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Display Technologies and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Emerging Display 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 Emerging Display Technologies are associated (or correlated) with Novatek Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novatek Microelectronics has no effect on the direction of Emerging Display i.e., Emerging Display and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Emerging Display and Novatek Microelectronics
Assuming the 90 days trading horizon Emerging Display is expected to generate 1.43 times less return on investment than Novatek Microelectronics. In addition to that, Emerging Display is 1.16 times more volatile than Novatek Microelectronics Corp. It trades about 0.02 of its total potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.04 per unit of volatility. If you would invest 43,900 in Novatek Microelectronics Corp on November 27, 2024 and sell it today you would earn a total of 11,300 from holding Novatek Microelectronics Corp or generate 25.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Display Technologies vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Emerging Display Tec |
| Novatek Microelectronics |
Emerging Display and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Display and Novatek Microelectronics
The main advantage of trading using opposite Emerging Display and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Display position performs unexpectedly, Novatek Microelectronics 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 Novatek Microelectronics will offset losses from the drop in Novatek Microelectronics' long position.| Emerging Display vs. Simplo Technology Co | Emerging Display vs. Hotel Holiday Garden | Emerging Display vs. Chicony Power Technology | Emerging Display vs. Ambassador Hotel |
| Novatek Microelectronics vs. Song Ho Industrial | Novatek Microelectronics vs. Mosa Industrial Corp | Novatek Microelectronics vs. Nova Technology | Novatek Microelectronics vs. Genovate Biotechnology Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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