Correlation Between Swancor Holding and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Swancor Holding 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 Swancor Holding and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swancor Holding Co and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Swancor Holding 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 Swancor Holding with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swancor Holding and Novatek Microelectronics.
Diversification Opportunities for Swancor Holding and Novatek Microelectronics
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swancor and Novatek is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Swancor Holding Co and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Swancor Holding 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 Swancor Holding Co 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 Swancor Holding i.e., Swancor Holding and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Swancor Holding and Novatek Microelectronics
Assuming the 90 days trading horizon Swancor Holding Co is expected to under-perform the Novatek Microelectronics. In addition to that, Swancor Holding is 1.98 times more volatile than Novatek Microelectronics Corp. It trades about -0.07 of its total potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about -0.09 per unit of volatility. If you would invest 59,800 in Novatek Microelectronics Corp on September 1, 2024 and sell it today you would lose (11,400) from holding Novatek Microelectronics Corp or give up 19.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Swancor Holding Co vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Swancor Holding |
| Novatek Microelectronics |
Swancor Holding and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swancor Holding and Novatek Microelectronics
The main advantage of trading using opposite Swancor Holding and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swancor Holding 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.| Swancor Holding vs. Century Iron And | Swancor Holding vs. Yeong Guan Energy | Swancor Holding vs. Chung Hsin Electric Machinery | Swancor Holding vs. Unimicron 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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