Correlation Between Novatek Microelectronics and Poya International

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

Diversification Opportunities for Novatek Microelectronics and Poya International

0.55

Correlation Coefficient

Novatek Microelectronics  Poya International

Very weak diversification

The 3 months correlation between Novatek and Poya is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Poya International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poya International 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 Poya International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poya International has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Poya International go up and down completely randomly.

Pair Corralation between Novatek Microelectronics and Poya International

Assuming the 90 days trading horizon Novatek Microelectronics Corp is expected to generate 1.2 times more return on investment than Poya International. However, Novatek Microelectronics is 1.2 times more volatile than Poya International Co. It trades about 0.02 of its potential returns per unit of risk. Poya International Co is currently generating about 0.01 per unit of risk. If you would invest  53,400  in Novatek Microelectronics Corp on December 10, 2024 and sell it today you would earn a total of  800.00  from holding Novatek Microelectronics Corp or generate 1.5% return on investment over 90 days.

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

Novatek Microelectronics Corp  vs.  Poya International Co

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.

Poya International

Risk-Adjusted Performance

Good

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

Pair Trading with Novatek Microelectronics and Poya International

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

The idea behind Novatek Microelectronics Corp and Poya International Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..