Correlation Between AAC TECHNOLOGHLDGADR and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and Silicon Motion Technology, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Silicon Motion.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and Silicon Motion
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AAC and Silicon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Silicon Motion go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and Silicon Motion
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.23 times more return on investment than Silicon Motion. However, AAC TECHNOLOGHLDGADR is 1.23 times more volatile than Silicon Motion Technology. It trades about 0.02 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about -0.05 per unit of risk. If you would invest 464.00 in AAC TECHNOLOGHLDGADR on November 6, 2024 and sell it today you would earn a total of 2.00 from holding AAC TECHNOLOGHLDGADR or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. Silicon Motion Technology
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| Silicon Motion Technology |
AAC TECHNOLOGHLDGADR and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and Silicon Motion
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR 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.| AAC TECHNOLOGHLDGADR vs. DALATA HOTEL | AAC TECHNOLOGHLDGADR vs. IDP EDUCATION LTD | AAC TECHNOLOGHLDGADR vs. Hyatt Hotels | AAC TECHNOLOGHLDGADR vs. American Public Education |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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