Correlation Between Nuvoton Technology and Generalplus Technology

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

By analyzing existing cross correlation between Nuvoton Technology Corp and Generalplus Technology, you can compare the effects of market volatilities on Nuvoton Technology and Generalplus Technology 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 Nuvoton Technology with a short position of Generalplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvoton Technology and Generalplus Technology.

Diversification Opportunities for Nuvoton Technology and Generalplus Technology

0.01

Correlation Coefficient

Nuvoton Technology  Generalplus Technology

Significant diversification

The 3 months correlation between Nuvoton and Generalplus is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nuvoton Technology Corp and Generalplus Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generalplus Technology and Nuvoton Technology 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 Nuvoton Technology Corp are associated (or correlated) with Generalplus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generalplus Technology has no effect on the direction of Nuvoton Technology i.e., Nuvoton Technology and Generalplus Technology go up and down completely randomly.

Pair Corralation between Nuvoton Technology and Generalplus Technology

Assuming the 90 days trading horizon Nuvoton Technology Corp is expected to generate 1.5 times more return on investment than Generalplus Technology. However, Nuvoton Technology is 1.5 times more volatile than Generalplus Technology. It trades about 0.09 of its potential returns per unit of risk. Generalplus Technology is currently generating about 0.03 per unit of risk. If you would invest  8,000  in Nuvoton Technology Corp on September 12, 2024 and sell it today you would earn a total of  1,450  from holding Nuvoton Technology Corp or generate 18.13% return on investment over 90 days.

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

Nuvoton Technology Corp  vs.  Generalplus Technology

Nuvoton Technology Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvoton Technology Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nuvoton Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Generalplus Technology

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Generalplus Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Generalplus Technology 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 Nuvoton Technology and Generalplus Technology

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

The idea behind Nuvoton Technology Corp and Generalplus Technology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.