Correlation Between Novatek Microelectronics and Holy Stone

Can any of the company-specific risk be diversified away by investing in both Novatek Microelectronics and Holy Stone 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 Holy Stone 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 Holy Stone Enterprise, you can compare the effects of market volatilities on Novatek Microelectronics and Holy Stone 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 Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatek Microelectronics and Holy Stone.

Diversification Opportunities for Novatek Microelectronics and Holy Stone

-0.03

Correlation Coefficient

Novatek Microelectronics  Holy Stone

Good diversification

The 3 months correlation between Novatek and Holy is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone Enterprise 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 Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Holy Stone go up and down completely randomly.

Pair Corralation between Novatek Microelectronics and Holy Stone

Assuming the 90 days trading horizon Novatek Microelectronics is expected to generate 2.62 times less return on investment than Holy Stone. But when comparing it to its historical volatility, Novatek Microelectronics Corp is 1.54 times less risky than Holy Stone. It trades about 0.07 of its potential returns per unit of risk. Holy Stone Enterprise is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,690  in Holy Stone Enterprise on December 5, 2024 and sell it today you would earn a total of  260.00  from holding Holy Stone Enterprise or generate 2.99% 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.  Holy Stone Enterprise

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 11 (%) 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.

Holy Stone Enterprise

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Novatek Microelectronics and Holy Stone

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

The idea behind Novatek Microelectronics Corp and Holy Stone Enterprise 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.