Correlation Between Gaming and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Gaming and Silicon Motion 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 Gaming and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming and Leisure and Silicon Motion Technology, you can compare the effects of market volatilities on Gaming and Silicon Motion 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 Gaming with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and Silicon Motion.
Diversification Opportunities for Gaming and Silicon Motion
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gaming and Silicon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology and Gaming 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 Gaming and Leisure are associated (or correlated) with Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of Gaming i.e., Gaming and Silicon Motion go up and down completely randomly.
Pair Corralation between Gaming and Silicon Motion
Assuming the 90 days horizon Gaming and Leisure is expected to generate 0.86 times more return on investment than Silicon Motion. However, Gaming and Leisure is 1.16 times less risky than Silicon Motion. It trades about -0.01 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about -0.01 per unit of risk. If you would invest 4,628 in Gaming and Leisure on November 3, 2024 and sell it today you would lose (37.00) from holding Gaming and Leisure or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming and Leisure vs. Silicon Motion Technology
Performance |
| Timeline |
| Gaming and Leisure |
| Silicon Motion Technology |
Gaming and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming and Silicon Motion
The main advantage of trading using opposite Gaming and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming position performs unexpectedly, Silicon Motion 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 Silicon Motion will offset losses from the drop in Silicon Motion's long position.| Gaming vs. Yuexiu Transport Infrastructure | Gaming vs. ALERION CLEANPOWER | Gaming vs. Verizon Communications | Gaming vs. Highlight Communications AG |
| Silicon Motion vs. BE Semiconductor Industries | Silicon Motion vs. Taiwan Semiconductor Manufacturing | Silicon Motion vs. National Retail Properties | Silicon Motion vs. Salesforce |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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