Correlation Between Allegheny Technologies and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies 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 Allegheny Technologies and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and Silicon Motion Technology, you can compare the effects of market volatilities on Allegheny Technologies 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 Allegheny Technologies with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Silicon Motion.
Diversification Opportunities for Allegheny Technologies and Silicon Motion
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Allegheny and Silicon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo 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 Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and Silicon Motion go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Silicon Motion
Assuming the 90 days trading horizon Allegheny Technologies Incorporated is expected to generate 0.83 times more return on investment than Silicon Motion. However, Allegheny Technologies Incorporated is 1.2 times less risky than Silicon Motion. It trades about 0.09 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 5,392 in Allegheny Technologies Incorporated on November 6, 2024 and sell it today you would earn a total of 176.00 from holding Allegheny Technologies Incorporated or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Silicon Motion Technology
Performance |
| Timeline |
| Allegheny Technologies |
| Silicon Motion Technology |
Allegheny Technologies and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Silicon Motion
The main advantage of trading using opposite Allegheny Technologies and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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.| Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc |
| Silicon Motion vs. LG Electronics | Silicon Motion vs. Nucletron Electronic Aktiengesellschaft | Silicon Motion vs. Nanjing Panda Electronics | Silicon Motion vs. Arrow 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 Stocks Directory module to find actively traded stocks across global markets.
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