Correlation Between Fitipower Integrated and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Fitipower Integrated 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 Fitipower Integrated and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fitipower Integrated Technology and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Fitipower Integrated 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 Fitipower Integrated with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fitipower Integrated and Novatek Microelectronics.
Diversification Opportunities for Fitipower Integrated and Novatek Microelectronics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fitipower and Novatek is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fitipower Integrated Technolog and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Fitipower Integrated 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 Fitipower Integrated 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 Fitipower Integrated i.e., Fitipower Integrated and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Fitipower Integrated and Novatek Microelectronics
Assuming the 90 days trading horizon Fitipower Integrated Technology is expected to generate 1.38 times more return on investment than Novatek Microelectronics. However, Fitipower Integrated is 1.38 times more volatile than Novatek Microelectronics Corp. It trades about 0.03 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about -0.01 per unit of risk. If you would invest 22,360 in Fitipower Integrated Technology on August 29, 2024 and sell it today you would earn a total of 1,790 from holding Fitipower Integrated Technology or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fitipower Integrated Technolog vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Fitipower Integrated |
| Novatek Microelectronics |
Fitipower Integrated and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fitipower Integrated and Novatek Microelectronics
The main advantage of trading using opposite Fitipower Integrated and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fitipower Integrated 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.| Fitipower Integrated vs. FocalTech Systems Co | Fitipower Integrated vs. Novatek Microelectronics Corp | Fitipower Integrated vs. Sitronix Technology Corp | Fitipower Integrated vs. AP Memory 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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