Correlation Between Advanced Micro and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Silicon Motion Technology, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Silicon Motion.
Diversification Opportunities for Advanced Micro and Silicon Motion
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advanced and Silicon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices 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 Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and Silicon Motion go up and down completely randomly.
Pair Corralation between Advanced Micro and Silicon Motion
Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the Silicon Motion. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Micro Devices is 1.2 times less risky than Silicon Motion. The stock trades about -0.13 of its potential returns per unit of risk. The Silicon Motion Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,209 in Silicon Motion Technology on September 14, 2024 and sell it today you would earn a total of 418.00 from holding Silicon Motion Technology or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. Silicon Motion Technology
Performance |
| Timeline |
| Advanced Micro Devices |
| Silicon Motion Technology |
Advanced Micro and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Silicon Motion
The main advantage of trading using opposite Advanced Micro and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron Technology |
| Silicon Motion vs. ON Semiconductor | Silicon Motion vs. Monolithic Power Systems | Silicon Motion vs. Globalfoundries | Silicon Motion vs. Wisekey International Holding |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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