Correlation Between Arbor Technology and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Arbor Technology 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 Arbor Technology and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Technology and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Arbor Technology 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 Arbor Technology with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Technology and Novatek Microelectronics.
Diversification Opportunities for Arbor Technology and Novatek Microelectronics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arbor and Novatek is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Technology and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Arbor Technology 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 Arbor Technology 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 Arbor Technology i.e., Arbor Technology and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Arbor Technology and Novatek Microelectronics
Assuming the 90 days trading horizon Arbor Technology is expected to generate 2.03 times more return on investment than Novatek Microelectronics. However, Arbor Technology is 2.03 times more volatile than Novatek Microelectronics Corp. It trades about 0.22 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about -0.14 per unit of risk. If you would invest 3,970 in Arbor Technology on August 30, 2024 and sell it today you would earn a total of 535.00 from holding Arbor Technology or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Arbor Technology vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Arbor Technology |
| Novatek Microelectronics |
Arbor Technology and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Technology and Novatek Microelectronics
The main advantage of trading using opposite Arbor Technology and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Technology 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.| Arbor Technology vs. Formosa International Hotels | Arbor Technology vs. Dadi Early Childhood Education | Arbor Technology vs. Landis Taipei Hotel | Arbor Technology vs. Asia Metal Industries |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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