Correlation Between EIDESVIK OFFSHORE and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and Silicon Motion Technology, you can compare the effects of market volatilities on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and Silicon Motion.
Diversification Opportunities for EIDESVIK OFFSHORE and Silicon Motion
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EIDESVIK and Silicon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Silicon Motion go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and Silicon Motion
Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 6.56 times less return on investment than Silicon Motion. But when comparing it to its historical volatility, EIDESVIK OFFSHORE NK is 2.09 times less risky than Silicon Motion. It trades about 0.04 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,772 in Silicon Motion Technology on September 4, 2024 and sell it today you would earn a total of 328.00 from holding Silicon Motion Technology or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. Silicon Motion Technology
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| Silicon Motion Technology |
EIDESVIK OFFSHORE and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and Silicon Motion
The main advantage of trading using opposite EIDESVIK OFFSHORE and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE 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.| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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