Correlation Between Silicon Power and Advanced Lithium
Can any of the company-specific risk be diversified away by investing in both Silicon Power and Advanced Lithium 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 Silicon Power and Advanced Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Power Computer and Advanced Lithium Electrochemistry, you can compare the effects of market volatilities on Silicon Power and Advanced Lithium 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 Silicon Power with a short position of Advanced Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Power and Advanced Lithium.
Diversification Opportunities for Silicon Power and Advanced Lithium
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and Advanced is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Power Computer and Advanced Lithium Electrochemis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Lithium Ele and Silicon Power 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 Silicon Power Computer are associated (or correlated) with Advanced Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Lithium Ele has no effect on the direction of Silicon Power i.e., Silicon Power and Advanced Lithium go up and down completely randomly.
Pair Corralation between Silicon Power and Advanced Lithium
Assuming the 90 days trading horizon Silicon Power is expected to generate 1.35 times less return on investment than Advanced Lithium. But when comparing it to its historical volatility, Silicon Power Computer is 2.42 times less risky than Advanced Lithium. It trades about 0.01 of its potential returns per unit of risk. Advanced Lithium Electrochemistry is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,020 in Advanced Lithium Electrochemistry on September 12, 2024 and sell it today you would lose (70.00) from holding Advanced Lithium Electrochemistry or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Silicon Power Computer vs. Advanced Lithium Electrochemis
Performance |
| Timeline |
| Silicon Power Computer |
| Advanced Lithium Ele |
Silicon Power and Advanced Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Power and Advanced Lithium
The main advantage of trading using opposite Silicon Power and Advanced Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Power position performs unexpectedly, Advanced Lithium 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 Advanced Lithium will offset losses from the drop in Advanced Lithium's long position.| Silicon Power vs. Orient Semiconductor Electronics | Silicon Power vs. Niko Semiconductor Co | Silicon Power vs. WIN Semiconductors | Silicon Power vs. Grand Ocean Retail |
| Advanced Lithium vs. STL Technology Co | Advanced Lithium vs. Microtips Technology | Advanced Lithium vs. Chung Hwa Chemical | Advanced Lithium vs. Posiflex Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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