Correlation Between An Shin and Novatek Microelectronics

Can any of the company-specific risk be diversified away by investing in both An Shin 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 An Shin and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between An Shin Food Services and Novatek Microelectronics Corp, you can compare the effects of market volatilities on An Shin 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 An Shin with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of An Shin and Novatek Microelectronics.

Diversification Opportunities for An Shin and Novatek Microelectronics

0.24

Correlation Coefficient

An Shin  Novatek Microelectronics

Modest diversification

The 3 months correlation between 1259 and Novatek is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding An Shin Food Services and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and An Shin 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 An Shin Food Services 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 An Shin i.e., An Shin and Novatek Microelectronics go up and down completely randomly.

Pair Corralation between An Shin and Novatek Microelectronics

Assuming the 90 days trading horizon An Shin Food Services is expected to under-perform the Novatek Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, An Shin Food Services is 1.54 times less risky than Novatek Microelectronics. The stock trades about -0.02 of its potential returns per unit of risk. The Novatek Microelectronics Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  50,000  in Novatek Microelectronics Corp on December 22, 2024 and sell it today you would earn a total of  5,400  from holding Novatek Microelectronics Corp or generate 10.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

An Shin Food Services  vs.  Novatek Microelectronics Corp

An Shin Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days An Shin Food Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, An Shin is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Novatek Microelectronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Novatek Microelectronics Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Novatek Microelectronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with An Shin and Novatek Microelectronics

The main advantage of trading using opposite An Shin and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if An Shin 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.

The idea behind An Shin Food Services and Novatek Microelectronics Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.