Correlation Between Novatek Microelectronics and I Chiun

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

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

Diversification Opportunities for Novatek Microelectronics and I Chiun

-0.39

Correlation Coefficient

Novatek Microelectronics  I Chiun

Very good diversification

The 3 months correlation between Novatek and 2486 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and I Chiun Precision Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Chiun Precision and Novatek Microelectronics 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 Novatek Microelectronics Corp are associated (or correlated) with I Chiun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Chiun Precision has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and I Chiun go up and down completely randomly.

Pair Corralation between Novatek Microelectronics and I Chiun

Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to under-perform the I Chiun. But the stock apears to be less risky and, when comparing its historical volatility, Novatek Microelectronics Corp is 2.16 times less risky than I Chiun. The stock trades about 0.0 of its potential returns per unit of risk. The I Chiun Precision Industry is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,225  in I Chiun Precision Industry on September 14, 2024 and sell it today you would earn a total of  7,825  from holding I Chiun Precision Industry or generate 185.21% return on investment over 90 days.

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

Novatek Microelectronics Corp  vs.  I Chiun Precision Industry

Novatek Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novatek Microelectronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

I Chiun Precision

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in I Chiun Precision Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, I Chiun showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novatek Microelectronics and I Chiun

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

The idea behind Novatek Microelectronics Corp and I Chiun Precision Industry 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.