Correlation Between Emerging Display and Silicon Power
Can any of the company-specific risk be diversified away by investing in both Emerging Display 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 Emerging Display and Silicon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Display Technologies and Silicon Power Computer, you can compare the effects of market volatilities on Emerging Display 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 Emerging Display with a short position of Silicon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Display and Silicon Power.
Diversification Opportunities for Emerging Display and Silicon Power
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerging and Silicon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Display Technologies 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 Emerging Display 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 Emerging Display Technologies 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 Emerging Display i.e., Emerging Display and Silicon Power go up and down completely randomly.
Pair Corralation between Emerging Display and Silicon Power
Assuming the 90 days trading horizon Emerging Display Technologies is expected to generate 0.71 times more return on investment than Silicon Power. However, Emerging Display Technologies is 1.41 times less risky than Silicon Power. It trades about 0.53 of its potential returns per unit of risk. Silicon Power Computer is currently generating about 0.3 per unit of risk. If you would invest 2,635 in Emerging Display Technologies on November 28, 2024 and sell it today you would earn a total of 250.00 from holding Emerging Display Technologies or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Display Technologies vs. Silicon Power Computer
Performance |
| Timeline |
| Emerging Display Tec |
| Silicon Power Computer |
Emerging Display and Silicon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Display and Silicon Power
The main advantage of trading using opposite Emerging Display and Silicon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Display 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.| Emerging Display vs. Microelectronics Technology | Emerging Display vs. Bright Led Electronics | Emerging Display vs. Taiwan Chinsan Electronic | Emerging Display vs. China Petrochemical Development |
| Silicon Power vs. Da Cin Construction Co | Silicon Power vs. Chong Hong Construction | Silicon Power vs. Te Chang Construction | Silicon Power vs. De Licacy Industrial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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