Correlation Between REGAL ASIAN and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Silicon Motion 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 REGAL ASIAN and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and Silicon Motion Technology, you can compare the effects of market volatilities on REGAL ASIAN and Silicon Motion 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 REGAL ASIAN with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Silicon Motion.
Diversification Opportunities for REGAL ASIAN and Silicon Motion
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REGAL and Silicon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology and REGAL ASIAN 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 REGAL ASIAN INVESTMENTS are associated (or correlated) with Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Silicon Motion go up and down completely randomly.
Pair Corralation between REGAL ASIAN and Silicon Motion
Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the Silicon Motion. But the stock apears to be less risky and, when comparing its historical volatility, REGAL ASIAN INVESTMENTS is 2.48 times less risky than Silicon Motion. The stock trades about -0.43 of its potential returns per unit of risk. The Silicon Motion Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,250 in Silicon Motion Technology on September 24, 2024 and sell it today you would lose (150.00) from holding Silicon Motion Technology or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL ASIAN INVESTMENTS vs. Silicon Motion Technology
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| Silicon Motion Technology |
REGAL ASIAN and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and Silicon Motion
The main advantage of trading using opposite REGAL ASIAN and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, Silicon Motion 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 Motion will offset losses from the drop in Silicon Motion's long position.| REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc |
| Silicon Motion vs. REGAL ASIAN INVESTMENTS | Silicon Motion vs. ECHO INVESTMENT ZY | Silicon Motion vs. Japan Asia Investment | Silicon Motion vs. Apollo Investment Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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