Correlation Between APEX International and Novatek Microelectronics
Can any of the company-specific risk be diversified away by investing in both APEX International and Novatek Microelectronics 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 APEX International and Novatek Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APEX International Financial and Novatek Microelectronics Corp, you can compare the effects of market volatilities on APEX International and Novatek Microelectronics 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 APEX International with a short position of Novatek Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of APEX International and Novatek Microelectronics.
Diversification Opportunities for APEX International and Novatek Microelectronics
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between APEX and Novatek is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding APEX International Financial and Novatek Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatek Microelectronics and APEX International 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 APEX International Financial are associated (or correlated) with Novatek Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novatek Microelectronics has no effect on the direction of APEX International i.e., APEX International and Novatek Microelectronics go up and down completely randomly.
Pair Corralation between APEX International and Novatek Microelectronics
Assuming the 90 days trading horizon APEX International Financial is expected to generate 2.44 times more return on investment than Novatek Microelectronics. However, APEX International is 2.44 times more volatile than Novatek Microelectronics Corp. It trades about 0.03 of its potential returns per unit of risk. Novatek Microelectronics Corp is currently generating about -0.05 per unit of risk. If you would invest 2,780 in APEX International Financial on September 18, 2024 and sell it today you would earn a total of 60.00 from holding APEX International Financial or generate 2.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
APEX International Financial vs. Novatek Microelectronics Corp
Performance |
Timeline |
APEX International |
Novatek Microelectronics |
APEX International and Novatek Microelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with APEX International and Novatek Microelectronics
The main advantage of trading using opposite APEX International and Novatek Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APEX International position performs unexpectedly, Novatek Microelectronics 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 Novatek Microelectronics will offset losses from the drop in Novatek Microelectronics' long position.APEX International vs. Mitake Information | APEX International vs. K Way Information | APEX International vs. YuantaP shares Taiwan Electronics | APEX International vs. YuantaP shares Taiwan Top |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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