Correlation Between HP and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both HP 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 HP and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Silicon Motion Technology, you can compare the effects of market volatilities on HP 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 HP with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Silicon Motion.
Diversification Opportunities for HP and Silicon Motion
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HP and Silicon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc 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 HP 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 HP Inc 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 HP i.e., HP and Silicon Motion go up and down completely randomly.
Pair Corralation between HP and Silicon Motion
Considering the 90-day investment horizon HP Inc is expected to generate 0.56 times more return on investment than Silicon Motion. However, HP Inc is 1.79 times less risky than Silicon Motion. It trades about 0.06 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.0 per unit of risk. If you would invest 3,742 in HP Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding HP Inc or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Silicon Motion Technology
Performance |
| Timeline |
| HP Inc |
| Silicon Motion Technology |
HP and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Silicon Motion
The main advantage of trading using opposite HP and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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.The idea behind HP Inc and Silicon Motion Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |