Correlation Between FIC Global and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both FIC Global 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 FIC Global and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIC Global and Novatek Microelectronics Corp, you can compare the effects of market volatilities on FIC Global 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 FIC Global with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIC Global and Novatek Microelectronics.
Diversification Opportunities for FIC Global and Novatek Microelectronics
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FIC and Novatek is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding FIC Global and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and FIC Global 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 FIC Global 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 FIC Global i.e., FIC Global and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between FIC Global and Novatek Microelectronics
Assuming the 90 days trading horizon FIC Global is expected to generate 4.0 times less return on investment than Novatek Microelectronics. In addition to that, FIC Global is 1.44 times more volatile than Novatek Microelectronics Corp. It trades about 0.01 of its total potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.06 per unit of volatility. If you would invest 29,900 in Novatek Microelectronics Corp on August 30, 2024 and sell it today you would earn a total of 18,250 from holding Novatek Microelectronics Corp or generate 61.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIC Global vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| FIC Global |
| Novatek Microelectronics |
FIC Global and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIC Global and Novatek Microelectronics
The main advantage of trading using opposite FIC Global and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIC Global 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.| FIC Global vs. IEI Integration Corp | FIC Global vs. ASRock Inc | FIC Global vs. AOPEN Inc | FIC Global vs. Getac Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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