Correlation Between ELL ENVIRONHLDGS and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELL ENVIRONHLDGS HD 0001 and Silicon Motion Technology, you can compare the effects of market volatilities on ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELL ENVIRONHLDGS and Silicon Motion.
Diversification Opportunities for ELL ENVIRONHLDGS and Silicon Motion
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between ELL and Silicon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ELL ENVIRONHLDGS HD 0001 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 ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS HD 0001 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 ELL ENVIRONHLDGS i.e., ELL ENVIRONHLDGS and Silicon Motion go up and down completely randomly.
Pair Corralation between ELL ENVIRONHLDGS and Silicon Motion
Assuming the 90 days horizon ELL ENVIRONHLDGS HD 0001 is expected to under-perform the Silicon Motion. But the stock apears to be less risky and, when comparing its historical volatility, ELL ENVIRONHLDGS HD 0001 is 1.14 times less risky than Silicon Motion. The stock trades about -0.17 of its potential returns per unit of risk. The Silicon Motion Technology is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 5,300 in Silicon Motion Technology on November 7, 2024 and sell it today you would lose (150.00) from holding Silicon Motion Technology or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELL ENVIRONHLDGS HD 0001 vs. Silicon Motion Technology
Performance |
| Timeline |
| ELL ENVIRONHLDGS |
| Silicon Motion Technology |
ELL ENVIRONHLDGS and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELL ENVIRONHLDGS and Silicon Motion
The main advantage of trading using opposite ELL ENVIRONHLDGS and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELL ENVIRONHLDGS 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.| ELL ENVIRONHLDGS vs. CARDINAL HEALTH | ELL ENVIRONHLDGS vs. Universal Health Realty | ELL ENVIRONHLDGS vs. Cardinal Health | ELL ENVIRONHLDGS vs. EPSILON HEALTHCARE LTD |
| Silicon Motion vs. Salesforce | Silicon Motion vs. ARROW ELECTRONICS | Silicon Motion vs. ZhongAn Online P | Silicon Motion vs. Nanjing Panda Electronics |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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