Correlation Between Nuvoton Technology and Fitipower Integrated

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

Diversification Opportunities for Nuvoton Technology and Fitipower Integrated

0.33

Correlation Coefficient

Nuvoton Technology  Fitipower Integrated

Weak diversification

The 3 months correlation between Nuvoton and Fitipower is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nuvoton Technology Corp and Fitipower Integrated Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fitipower Integrated 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 Fitipower Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fitipower Integrated has no effect on the direction of Nuvoton Technology i.e., Nuvoton Technology and Fitipower Integrated go up and down completely randomly.

Pair Corralation between Nuvoton Technology and Fitipower Integrated

Assuming the 90 days trading horizon Nuvoton Technology Corp is expected to generate 1.94 times more return on investment than Fitipower Integrated. However, Nuvoton Technology is 1.94 times more volatile than Fitipower Integrated Technology. It trades about 0.01 of its potential returns per unit of risk. Fitipower Integrated Technology is currently generating about -0.16 per unit of risk. If you would invest  9,060  in Nuvoton Technology Corp on December 25, 2024 and sell it today you would earn a total of  10.00  from holding Nuvoton Technology Corp or generate 0.11% return on investment over 90 days.

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

Nuvoton Technology Corp  vs.  Fitipower Integrated Technolog

Nuvoton Technology Corp

Risk-Adjusted Performance

Very Weak

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

Fitipower Integrated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fitipower Integrated Technology 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.

Pair Trading with Nuvoton Technology and Fitipower Integrated

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

The idea behind Nuvoton Technology Corp and Fitipower Integrated 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.