Correlation Between NOVATECH and Sangsin Energy

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

By analyzing existing cross correlation between NOVATECH Co and Sangsin Energy Display, you can compare the effects of market volatilities on NOVATECH and Sangsin Energy 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 NOVATECH with a short position of Sangsin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and Sangsin Energy.

Diversification Opportunities for NOVATECH and Sangsin Energy

-0.24

Correlation Coefficient

NOVATECH  Sangsin Energy

Very good diversification

The 3 months correlation between NOVATECH and Sangsin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH Co and Sangsin Energy Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsin Energy Display and NOVATECH 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 NOVATECH Co are associated (or correlated) with Sangsin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsin Energy Display has no effect on the direction of NOVATECH i.e., NOVATECH and Sangsin Energy go up and down completely randomly.

Pair Corralation between NOVATECH and Sangsin Energy

Assuming the 90 days trading horizon NOVATECH Co is expected to generate 1.23 times more return on investment than Sangsin Energy. However, NOVATECH is 1.23 times more volatile than Sangsin Energy Display. It trades about -0.01 of its potential returns per unit of risk. Sangsin Energy Display is currently generating about -0.08 per unit of risk. If you would invest  2,290,129  in NOVATECH Co on October 5, 2024 and sell it today you would lose (835,129) from holding NOVATECH Co or give up 36.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NOVATECH Co  vs.  Sangsin Energy Display

NOVATECH

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NOVATECH Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NOVATECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Sangsin Energy Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sangsin Energy Display has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NOVATECH and Sangsin Energy

The main advantage of trading using opposite NOVATECH and Sangsin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH position performs unexpectedly, Sangsin Energy 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 Sangsin Energy will offset losses from the drop in Sangsin Energy's long position.

The idea behind NOVATECH Co and Sangsin Energy Display 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.