Correlation Between Kinko Optical and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Kinko Optical 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 Kinko Optical and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinko Optical Co and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Kinko Optical 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 Kinko Optical with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinko Optical and Novatek Microelectronics.
Diversification Opportunities for Kinko Optical and Novatek Microelectronics
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinko and Novatek is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kinko Optical Co and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Kinko Optical 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 Kinko Optical Co 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 Kinko Optical i.e., Kinko Optical and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Kinko Optical and Novatek Microelectronics
Assuming the 90 days trading horizon Kinko Optical is expected to generate 14.89 times less return on investment than Novatek Microelectronics. In addition to that, Kinko Optical is 1.04 times more volatile than Novatek Microelectronics Corp. It trades about 0.0 of its total potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.06 per unit of volatility. If you would invest 29,550 in Novatek Microelectronics Corp on September 3, 2024 and sell it today you would earn a total of 18,850 from holding Novatek Microelectronics Corp or generate 63.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Kinko Optical Co vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Kinko Optical |
| Novatek Microelectronics |
Kinko Optical and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinko Optical and Novatek Microelectronics
The main advantage of trading using opposite Kinko Optical and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinko Optical 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.| Kinko Optical vs. Asia Optical Co | Kinko Optical vs. Genius Electronic Optical | Kinko Optical vs. Altek Corp | Kinko Optical vs. Hannstar Display Corp |
| Novatek Microelectronics vs. First Hotel Co | Novatek Microelectronics vs. BenQ Materials Corp | Novatek Microelectronics vs. FarGlory Hotel Co | Novatek Microelectronics vs. Grand Plastic 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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