Correlation Between APEX International and Novatek Microelectronics

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

APEX International Financial  vs.  Novatek Microelectronics Corp

 Performance 
       Timeline  
APEX International 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in APEX International Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, APEX International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Novatek Microelectronics 

Risk-Adjusted Performance

0 of 100

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

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.
The idea behind APEX International Financial and Novatek Microelectronics Corp 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.
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.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Fundamental Analysis
View fundamental data based on most recent published financial statements
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.