Correlation Between Nova Technology and Chia Yi
Can any of the company-specific risk be diversified away by investing in both Nova Technology and Chia Yi 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 Nova Technology and Chia Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Technology and Chia Yi Steel, you can compare the effects of market volatilities on Nova Technology and Chia Yi 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 Nova Technology with a short position of Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Technology and Chia Yi.
Diversification Opportunities for Nova Technology and Chia Yi
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nova and Chia is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nova Technology and Chia Yi Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Yi Steel and Nova 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 Nova Technology are associated (or correlated) with Chia Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Yi Steel has no effect on the direction of Nova Technology i.e., Nova Technology and Chia Yi go up and down completely randomly.
Pair Corralation between Nova Technology and Chia Yi
Assuming the 90 days trading horizon Nova Technology is expected to generate 0.73 times more return on investment than Chia Yi. However, Nova Technology is 1.37 times less risky than Chia Yi. It trades about 0.17 of its potential returns per unit of risk. Chia Yi Steel is currently generating about -0.01 per unit of risk. If you would invest 16,300 in Nova Technology on October 26, 2024 and sell it today you would earn a total of 9,700 from holding Nova Technology or generate 59.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Technology vs. Chia Yi Steel
Performance |
| Timeline |
| Nova Technology |
| Chia Yi Steel |
Nova Technology and Chia Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Technology and Chia Yi
The main advantage of trading using opposite Nova Technology and Chia Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Technology position performs unexpectedly, Chia Yi 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 Chia Yi will offset losses from the drop in Chia Yi's long position.| Nova Technology vs. Acter Co | Nova Technology vs. Chicony Electronics Co | Nova Technology vs. Elite Material Co | Nova Technology vs. Chipbond Technology |
| Chia Yi vs. Nova Technology | Chia Yi vs. Mayer Steel Pipe | Chia Yi vs. United Radiant Technology | Chia Yi vs. Asmedia 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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