Correlation Between Nan Ya and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both Nan Ya 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 Nan Ya and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nan Ya Printed and Novatek Microelectronics Corp, you can compare the effects of market volatilities on Nan Ya 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 Nan Ya with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Novatek Microelectronics.
Diversification Opportunities for Nan Ya and Novatek Microelectronics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nan and Novatek is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Printed and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and Nan Ya 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 Nan Ya Printed 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 Nan Ya i.e., Nan Ya and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between Nan Ya and Novatek Microelectronics
Assuming the 90 days trading horizon Nan Ya Printed is expected to under-perform the Novatek Microelectronics. In addition to that, Nan Ya is 1.3 times more volatile than Novatek Microelectronics Corp. It trades about -0.04 of its total potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about 0.04 per unit of volatility. If you would invest 41,550 in Novatek Microelectronics Corp on November 19, 2024 and sell it today you would earn a total of 12,950 from holding Novatek Microelectronics Corp or generate 31.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Printed vs. Novatek Microelectronics Corp
Performance |
| Timeline |
| Nan Ya Printed |
| Novatek Microelectronics |
Nan Ya and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Novatek Microelectronics
The main advantage of trading using opposite Nan Ya and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya 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.| Nan Ya vs. Unimicron Technology Corp | Nan Ya vs. Kinsus Interconnect Technology | Nan Ya vs. Novatek Microelectronics Corp | Nan Ya vs. Delta Electronics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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