Correlation Between ASRock and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both ASRock 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 ASRock and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASRock Inc and Novatek Microelectronics Corp, you can compare the effects of market volatilities on ASRock 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 ASRock with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASRock and Novatek Microelectronics.
Diversification Opportunities for ASRock and Novatek Microelectronics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASRock and Novatek is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ASRock Inc and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and ASRock 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 ASRock Inc 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 ASRock i.e., ASRock and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between ASRock and Novatek Microelectronics
Assuming the 90 days trading horizon ASRock Inc is expected to generate 1.59 times more return on investment than Novatek Microelectronics. However, ASRock is 1.59 times more volatile than Novatek Microelectronics Corp. It trades about 0.06 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.06 per unit of risk. If you would invest 12,700 in ASRock Inc on August 30, 2024 and sell it today you would earn a total of 10,900 from holding ASRock Inc or generate 85.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASRock Inc vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| ASRock Inc |
| Novatek Microelectronics |
ASRock and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASRock and Novatek Microelectronics
The main advantage of trading using opposite ASRock and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASRock 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.| ASRock vs. Gigabyte Technology Co | ASRock vs. Micro Star International Co | ASRock vs. Asustek Computer | ASRock vs. Kinsus Interconnect Technology |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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