Correlation Between Silicon Power and Arima Communications
Can any of the company-specific risk be diversified away by investing in both Silicon Power and Arima Communications 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 Arima Communications 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 Arima Communications Corp, you can compare the effects of market volatilities on Silicon Power and Arima Communications 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 Arima Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Power and Arima Communications.
Diversification Opportunities for Silicon Power and Arima Communications
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and Arima is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Power Computer and Arima Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arima Communications Corp 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 Arima Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arima Communications Corp has no effect on the direction of Silicon Power i.e., Silicon Power and Arima Communications go up and down completely randomly.
Pair Corralation between Silicon Power and Arima Communications
Assuming the 90 days trading horizon Silicon Power is expected to generate 263.76 times less return on investment than Arima Communications. But when comparing it to its historical volatility, Silicon Power Computer is 3.78 times less risky than Arima Communications. It trades about 0.01 of its potential returns per unit of risk. Arima Communications Corp is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Arima Communications Corp on September 12, 2024 and sell it today you would earn a total of 1,490 from holding Arima Communications Corp or generate 156.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Silicon Power Computer vs. Arima Communications Corp
Performance |
| Timeline |
| Silicon Power Computer |
| Arima Communications Corp |
Silicon Power and Arima Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Power and Arima Communications
The main advantage of trading using opposite Silicon Power and Arima Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Power position performs unexpectedly, Arima Communications 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 Arima Communications will offset losses from the drop in Arima Communications' 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 |
| Arima Communications vs. AU Optronics | Arima Communications vs. Innolux Corp | Arima Communications vs. Ruentex Development Co | Arima Communications vs. WiseChip Semiconductor |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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