Correlation Between Sino American and MPI
Can any of the company-specific risk be diversified away by investing in both Sino American and MPI 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 Sino American and MPI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and MPI Corporation, you can compare the effects of market volatilities on Sino American and MPI 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 Sino American with a short position of MPI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and MPI.
Diversification Opportunities for Sino American and MPI
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sino and MPI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products and MPI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPI Corporation and Sino American 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 Sino American Silicon Products are associated (or correlated) with MPI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPI Corporation has no effect on the direction of Sino American i.e., Sino American and MPI go up and down completely randomly.
Pair Corralation between Sino American and MPI
Assuming the 90 days trading horizon Sino American is expected to generate 15.26 times less return on investment than MPI. But when comparing it to its historical volatility, Sino American Silicon Products is 1.82 times less risky than MPI. It trades about 0.02 of its potential returns per unit of risk. MPI Corporation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 11,186 in MPI Corporation on September 2, 2024 and sell it today you would earn a total of 66,814 from holding MPI Corporation or generate 597.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sino American Silicon Products vs. MPI Corp.
Performance |
| Timeline |
| Sino American Silicon |
| MPI Corporation |
Sino American and MPI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and MPI
The main advantage of trading using opposite Sino American and MPI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American position performs unexpectedly, MPI 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 MPI will offset losses from the drop in MPI's long position.| Sino American vs. GlobalWafers Co | Sino American vs. Wafer Works | Sino American vs. Motech Industries Co | Sino American vs. WIN Semiconductors |
| MPI vs. Sino American Silicon Products | MPI vs. Powertech Technology | MPI vs. Formosa Sumco Technology | MPI vs. Radiant Opto Electronics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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