Correlation Between Nuvoton Technology and Syntek Semiconductor

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

Diversification Opportunities for Nuvoton Technology and Syntek Semiconductor

-0.2

Correlation Coefficient

Nuvoton Technology  Syntek Semiconductor

Good diversification

The 3 months correlation between Nuvoton and Syntek is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nuvoton Technology Corp and Syntek Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syntek Semiconductor 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 Syntek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syntek Semiconductor has no effect on the direction of Nuvoton Technology i.e., Nuvoton Technology and Syntek Semiconductor go up and down completely randomly.

Pair Corralation between Nuvoton Technology and Syntek Semiconductor

Assuming the 90 days trading horizon Nuvoton Technology Corp is expected to generate 2.11 times more return on investment than Syntek Semiconductor. However, Nuvoton Technology is 2.11 times more volatile than Syntek Semiconductor Co. It trades about 0.07 of its potential returns per unit of risk. Syntek Semiconductor Co is currently generating about -0.3 per unit of risk. If you would invest  8,340  in Nuvoton Technology Corp on October 8, 2024 and sell it today you would earn a total of  930.00  from holding Nuvoton Technology Corp or generate 11.15% return on investment over 90 days.

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

Nuvoton Technology Corp  vs.  Syntek Semiconductor Co

Nuvoton Technology Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvoton Technology Corp are ranked lower than 5 (%) 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.

Syntek Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syntek Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nuvoton Technology and Syntek Semiconductor

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

The idea behind Nuvoton Technology Corp and Syntek Semiconductor 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.