Correlation Between FDC International and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both FDC International 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 FDC International and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FDC International Hotels and Novatek Microelectronics Corp, you can compare the effects of market volatilities on FDC International 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 FDC International with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDC International and Novatek Microelectronics.
Diversification Opportunities for FDC International and Novatek Microelectronics
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between FDC and Novatek is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding FDC International Hotels and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and FDC International 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 FDC International Hotels 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 FDC International i.e., FDC International and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between FDC International and Novatek Microelectronics
Assuming the 90 days trading horizon FDC International Hotels is expected to generate 0.96 times more return on investment than Novatek Microelectronics. However, FDC International Hotels is 1.04 times less risky than Novatek Microelectronics. It trades about 0.07 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about -0.12 per unit of risk. If you would invest 6,060 in FDC International Hotels on September 13, 2024 and sell it today you would earn a total of 190.00 from holding FDC International Hotels or generate 3.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
FDC International Hotels vs. Novatek Microelectronics Corp
Performance |
Timeline |
FDC International Hotels |
Novatek Microelectronics |
FDC International and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FDC International and Novatek Microelectronics
The main advantage of trading using opposite FDC International and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FDC International 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.FDC International vs. Feng Tay Enterprises | FDC International vs. Ruentex Development Co | FDC International vs. WiseChip Semiconductor | FDC International 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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