Correlation Between Holtek Semiconductor and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Holtek Semiconductor 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 Holtek Semiconductor and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holtek Semiconductor and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Holtek Semiconductor 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 Holtek Semiconductor with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holtek Semiconductor and Novatek Microelectronics.
Diversification Opportunities for Holtek Semiconductor and Novatek Microelectronics
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Holtek and Novatek is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Holtek Semiconductor and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Holtek Semiconductor 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 Holtek Semiconductor 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 Holtek Semiconductor i.e., Holtek Semiconductor and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Holtek Semiconductor and Novatek Microelectronics
Assuming the 90 days trading horizon Holtek Semiconductor is expected to under-perform the Novatek Microelectronics. In addition to that, Holtek Semiconductor is 1.57 times more volatile than Novatek Microelectronics Corp. It trades about -0.19 of its total potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about -0.23 per unit of volatility. If you would invest 51,400 in Novatek Microelectronics Corp on August 26, 2024 and sell it today you would lose (3,400) from holding Novatek Microelectronics Corp or give up 6.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holtek Semiconductor vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Holtek Semiconductor |
| Novatek Microelectronics |
Holtek Semiconductor and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holtek Semiconductor and Novatek Microelectronics
The main advantage of trading using opposite Holtek Semiconductor and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holtek Semiconductor 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.| Holtek Semiconductor vs. Novatek Microelectronics Corp | Holtek Semiconductor vs. Realtek Semiconductor Corp | Holtek Semiconductor vs. Nuvoton Technology Corp | Holtek Semiconductor vs. Global Unichip 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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