Correlation Between Silicon Power and Simplo Technology
Can any of the company-specific risk be diversified away by investing in both Silicon Power and Simplo Technology 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 Simplo Technology 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 Simplo Technology Co, you can compare the effects of market volatilities on Silicon Power and Simplo Technology 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 Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Power and Simplo Technology.
Diversification Opportunities for Silicon Power and Simplo Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Silicon and Simplo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Power Computer and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of Silicon Power i.e., Silicon Power and Simplo Technology go up and down completely randomly.
Pair Corralation between Silicon Power and Simplo Technology
Assuming the 90 days trading horizon Silicon Power Computer is expected to generate 1.35 times more return on investment than Simplo Technology. However, Silicon Power is 1.35 times more volatile than Simplo Technology Co. It trades about 0.05 of its potential returns per unit of risk. Simplo Technology Co is currently generating about 0.05 per unit of risk. If you would invest 2,075 in Silicon Power Computer on September 5, 2024 and sell it today you would earn a total of 1,215 from holding Silicon Power Computer or generate 58.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Power Computer vs. Simplo Technology Co
Performance |
| Timeline |
| Silicon Power Computer |
| Simplo Technology |
Silicon Power and Simplo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Power and Simplo Technology
The main advantage of trading using opposite Silicon Power and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Power position performs unexpectedly, Simplo Technology 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 Simplo Technology will offset losses from the drop in Simplo Technology's long position.| Silicon Power vs. Quanta Computer | Silicon Power vs. Elitegroup Computer Systems | Silicon Power vs. WiseChip Semiconductor | Silicon Power vs. Novatek Microelectronics Corp |
| Simplo Technology vs. Dynapack International Technology | Simplo Technology vs. Catcher Technology Co | Simplo Technology vs. Delta Electronics | Simplo Technology vs. Powertech 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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