Correlation Between IEI Integration and Silicon Power
Can any of the company-specific risk be diversified away by investing in both IEI Integration and Silicon Power 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 IEI Integration and Silicon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IEI Integration Corp and Silicon Power Computer, you can compare the effects of market volatilities on IEI Integration and Silicon Power 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 IEI Integration with a short position of Silicon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of IEI Integration and Silicon Power.
Diversification Opportunities for IEI Integration and Silicon Power
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IEI and Silicon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding IEI Integration Corp and Silicon Power Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Power Computer and IEI Integration 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 IEI Integration Corp are associated (or correlated) with Silicon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Power Computer has no effect on the direction of IEI Integration i.e., IEI Integration and Silicon Power go up and down completely randomly.
Pair Corralation between IEI Integration and Silicon Power
Assuming the 90 days trading horizon IEI Integration is expected to generate 2.12 times less return on investment than Silicon Power. In addition to that, IEI Integration is 1.15 times more volatile than Silicon Power Computer. It trades about 0.05 of its total potential returns per unit of risk. Silicon Power Computer is currently generating about 0.13 per unit of volatility. If you would invest 3,145 in Silicon Power Computer on August 31, 2024 and sell it today you would earn a total of 165.00 from holding Silicon Power Computer or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IEI Integration Corp vs. Silicon Power Computer
Performance |
| Timeline |
| IEI Integration Corp |
| Silicon Power Computer |
IEI Integration and Silicon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IEI Integration and Silicon Power
The main advantage of trading using opposite IEI Integration and Silicon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IEI Integration position performs unexpectedly, Silicon Power 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 Power will offset losses from the drop in Silicon Power's long position.| IEI Integration vs. United Microelectronics | IEI Integration vs. Winbond Electronics Corp | IEI Integration vs. Macronix International Co |
| Silicon Power vs. Quanta Computer | Silicon Power vs. Wiwynn Corp | Silicon Power vs. Getac Technology Corp | Silicon Power vs. InnoDisk |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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