Correlation Between Novatek Microelectronics and Gigastone

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

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

Diversification Opportunities for Novatek Microelectronics and Gigastone

0.0

Correlation Coefficient

Novatek Microelectronics  Gigastone

Pay attention - limited upside

The 3 months correlation between Novatek and Gigastone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Novatek Microelectronics Corp and Gigastone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigastone and Novatek Microelectronics 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 Novatek Microelectronics Corp are associated (or correlated) with Gigastone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigastone has no effect on the direction of Novatek Microelectronics i.e., Novatek Microelectronics and Gigastone go up and down completely randomly.

Pair Corralation between Novatek Microelectronics and Gigastone

If you would invest  55,000  in Novatek Microelectronics Corp on February 18, 2024 and sell it today you would earn a total of  5,300  from holding Novatek Microelectronics Corp or generate 9.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Novatek Microelectronics Corp  vs.  Gigastone

Novatek Microelectronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Novatek Microelectronics Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Novatek Microelectronics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Gigastone

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gigastone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gigastone may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Novatek Microelectronics and Gigastone

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

The idea behind Novatek Microelectronics Corp and Gigastone 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.