Correlation Between Silicon Power and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Silicon Power 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 Silicon Power and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Power Computer and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Silicon Power 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 Silicon Power with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Power and Novatek Microelectronics.
Diversification Opportunities for Silicon Power and Novatek Microelectronics
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and Novatek is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Power Computer and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Silicon Power 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 Silicon Power Computer 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 Silicon Power i.e., Silicon Power and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Silicon Power and Novatek Microelectronics
Assuming the 90 days trading horizon Silicon Power Computer is expected to generate 1.31 times more return on investment than Novatek Microelectronics. However, Silicon Power is 1.31 times more volatile than Novatek Microelectronics Corp. It trades about 0.05 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.04 per unit of risk. If you would invest 1,999 in Silicon Power Computer on November 1, 2024 and sell it today you would earn a total of 1,146 from holding Silicon Power Computer or generate 57.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Power Computer vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Silicon Power Computer |
| Novatek Microelectronics |
Silicon Power and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Power and Novatek Microelectronics
The main advantage of trading using opposite Silicon Power and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Power 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.| Silicon Power vs. Hi Lai Foods Co | Silicon Power vs. Tex Ray Industrial Co | Silicon Power vs. ALFORMER Industrial Co | Silicon Power vs. Chialin Precision Industrial |
| Novatek Microelectronics vs. Wha Yu Industrial | Novatek Microelectronics vs. CTBC Financial Holding | Novatek Microelectronics vs. O Bank Co | Novatek Microelectronics vs. Jentech Precision Industrial |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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