Correlation Between Highlight Tech and Nova Technology
Can any of the company-specific risk be diversified away by investing in both Highlight Tech and Nova Technology 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 Highlight Tech and Nova Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Tech and Nova Technology, you can compare the effects of market volatilities on Highlight Tech and Nova Technology 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 Highlight Tech with a short position of Nova Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Tech and Nova Technology.
Diversification Opportunities for Highlight Tech and Nova Technology
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highlight and Nova is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Tech and Nova Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Technology and Highlight Tech 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 Highlight Tech are associated (or correlated) with Nova Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Technology has no effect on the direction of Highlight Tech i.e., Highlight Tech and Nova Technology go up and down completely randomly.
Pair Corralation between Highlight Tech and Nova Technology
Assuming the 90 days trading horizon Highlight Tech is expected to under-perform the Nova Technology. In addition to that, Highlight Tech is 1.02 times more volatile than Nova Technology. It trades about -0.12 of its total potential returns per unit of risk. Nova Technology is currently generating about -0.02 per unit of volatility. If you would invest 18,950 in Nova Technology on September 13, 2024 and sell it today you would lose (150.00) from holding Nova Technology or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Tech vs. Nova Technology
Performance |
| Timeline |
| Highlight Tech |
| Nova Technology |
Highlight Tech and Nova Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Tech and Nova Technology
The main advantage of trading using opposite Highlight Tech and Nova Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Tech position performs unexpectedly, Nova Technology 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 Nova Technology will offset losses from the drop in Nova Technology's long position.| Highlight Tech vs. Syntek Semiconductor Co | Highlight Tech vs. Chernan Metal Industrial | Highlight Tech vs. Asia Metal Industries | Highlight Tech vs. WiseChip Semiconductor |
| Nova Technology vs. Highlight Tech | Nova Technology vs. Ruentex Development Co | Nova Technology vs. WiseChip Semiconductor | Nova Technology vs. Novatek Microelectronics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |