Correlation Between DEUTSCHE BOERSE and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both DEUTSCHE BOERSE 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 DEUTSCHE BOERSE and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DEUTSCHE BOERSE ADR and Silicon Motion Technology, you can compare the effects of market volatilities on DEUTSCHE BOERSE 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 DEUTSCHE BOERSE with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE BOERSE and Silicon Motion.
Diversification Opportunities for DEUTSCHE BOERSE and Silicon Motion
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DEUTSCHE and Silicon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE BOERSE ADR 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 DEUTSCHE BOERSE 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 DEUTSCHE BOERSE ADR 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 DEUTSCHE BOERSE i.e., DEUTSCHE BOERSE and Silicon Motion go up and down completely randomly.
Pair Corralation between DEUTSCHE BOERSE and Silicon Motion
Assuming the 90 days trading horizon DEUTSCHE BOERSE is expected to generate 3.06 times less return on investment than Silicon Motion. But when comparing it to its historical volatility, DEUTSCHE BOERSE ADR is 2.57 times less risky than Silicon Motion. It trades about 0.17 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,791 in Silicon Motion Technology on September 13, 2024 and sell it today you would earn a total of 559.00 from holding Silicon Motion Technology or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DEUTSCHE BOERSE ADR vs. Silicon Motion Technology
Performance |
| Timeline |
| DEUTSCHE BOERSE ADR |
| Silicon Motion Technology |
DEUTSCHE BOERSE and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DEUTSCHE BOERSE and Silicon Motion
The main advantage of trading using opposite DEUTSCHE BOERSE and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DEUTSCHE BOERSE 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.| DEUTSCHE BOERSE vs. CEOTRONICS | DEUTSCHE BOERSE vs. VULCAN MATERIALS | DEUTSCHE BOERSE vs. NEWELL RUBBERMAID | DEUTSCHE BOERSE vs. Materialise NV |
| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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