Correlation Between Silicon Power and Tait Marketing
Can any of the company-specific risk be diversified away by investing in both Silicon Power and Tait Marketing 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 Tait Marketing 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 Tait Marketing Distribution, you can compare the effects of market volatilities on Silicon Power and Tait Marketing 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 Tait Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Power and Tait Marketing.
Diversification Opportunities for Silicon Power and Tait Marketing
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Silicon and Tait is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Power Computer and Tait Marketing Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tait Marketing Distr 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 Tait Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tait Marketing Distr has no effect on the direction of Silicon Power i.e., Silicon Power and Tait Marketing go up and down completely randomly.
Pair Corralation between Silicon Power and Tait Marketing
Assuming the 90 days trading horizon Silicon Power Computer is expected to generate 1.66 times more return on investment than Tait Marketing. However, Silicon Power is 1.66 times more volatile than Tait Marketing Distribution. It trades about 0.06 of its potential returns per unit of risk. Tait Marketing Distribution is currently generating about 0.04 per unit of risk. If you would invest 1,929 in Silicon Power Computer on September 13, 2024 and sell it today you would earn a total of 1,291 from holding Silicon Power Computer or generate 66.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Power Computer vs. Tait Marketing Distribution
Performance |
| Timeline |
| Silicon Power Computer |
| Tait Marketing Distr |
Silicon Power and Tait Marketing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Power and Tait Marketing
The main advantage of trading using opposite Silicon Power and Tait Marketing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Power position performs unexpectedly, Tait Marketing 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 Tait Marketing will offset losses from the drop in Tait Marketing's long position.| Silicon Power vs. Qisda Corp | Silicon Power vs. Quanta Computer | Silicon Power vs. Wistron Corp | Silicon Power vs. Delta Electronics |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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