Correlation Between SS Healthcare and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both SS Healthcare 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 SS Healthcare and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SS Healthcare Holding and Novatek Microelectronics Corp, you can compare the effects of market volatilities on SS Healthcare 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 SS Healthcare with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SS Healthcare and Novatek Microelectronics.
Diversification Opportunities for SS Healthcare and Novatek Microelectronics
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between 4198 and Novatek is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SS Healthcare Holding and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and SS Healthcare 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 SS Healthcare Holding 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 SS Healthcare i.e., SS Healthcare and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between SS Healthcare and Novatek Microelectronics
Assuming the 90 days trading horizon SS Healthcare is expected to generate 1.39 times less return on investment than Novatek Microelectronics. In addition to that, SS Healthcare is 1.68 times more volatile than Novatek Microelectronics Corp. It trades about 0.03 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 30,150 in Novatek Microelectronics Corp on September 13, 2024 and sell it today you would earn a total of 18,350 from holding Novatek Microelectronics Corp or generate 60.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SS Healthcare Holding vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| SS Healthcare Holding |
| Novatek Microelectronics |
SS Healthcare and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SS Healthcare and Novatek Microelectronics
The main advantage of trading using opposite SS Healthcare and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SS Healthcare 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.| SS Healthcare vs. Universal Vision Biotechnology | SS Healthcare vs. Excelsior Medical Co | SS Healthcare vs. Pacific Hospital Supply | SS Healthcare vs. Ruentex Development 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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