Correlation Between Aspeed Technology and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Aspeed Technology 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 Aspeed Technology and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspeed Technology and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Aspeed Technology 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 Aspeed Technology with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspeed Technology and Novatek Microelectronics.
Diversification Opportunities for Aspeed Technology and Novatek Microelectronics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aspeed and Novatek is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Aspeed Technology 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 Aspeed 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 Aspeed Technology i.e., Aspeed Technology and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Aspeed Technology and Novatek Microelectronics
Assuming the 90 days trading horizon Aspeed Technology is expected to generate 2.58 times more return on investment than Novatek Microelectronics. However, Aspeed Technology is 2.58 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 -0.18 per unit of risk. If you would invest 436,000 in Aspeed Technology on August 29, 2024 and sell it today you would lose (26,000) from holding Aspeed Technology or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspeed Technology vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Aspeed Technology |
| Novatek Microelectronics |
Aspeed Technology and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspeed Technology and Novatek Microelectronics
The main advantage of trading using opposite Aspeed Technology and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspeed Technology 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.| Aspeed Technology vs. Asmedia Technology | Aspeed Technology vs. Silergy Corp | Aspeed Technology vs. Parade Technologies | Aspeed Technology vs. Wiwynn 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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