Correlation Between Shoprite Holdings and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings 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 Shoprite Holdings and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings Limited and Silicon Motion Technology, you can compare the effects of market volatilities on Shoprite Holdings 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 Shoprite Holdings with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Silicon Motion.
Diversification Opportunities for Shoprite Holdings and Silicon Motion
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shoprite and Silicon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Limited 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 Shoprite Holdings 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 Shoprite Holdings Limited 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 Shoprite Holdings i.e., Shoprite Holdings and Silicon Motion go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Silicon Motion
Assuming the 90 days horizon Shoprite Holdings Limited is expected to generate 1.72 times more return on investment than Silicon Motion. However, Shoprite Holdings is 1.72 times more volatile than Silicon Motion Technology. It trades about 0.09 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 360.00 in Shoprite Holdings Limited on September 3, 2024 and sell it today you would earn a total of 1,190 from holding Shoprite Holdings Limited or generate 330.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoprite Holdings Limited vs. Silicon Motion Technology
Performance |
| Timeline |
| Shoprite Holdings |
| Silicon Motion Technology |
Shoprite Holdings and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and Silicon Motion
The main advantage of trading using opposite Shoprite Holdings and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings 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.| Shoprite Holdings vs. LION ONE METALS | Shoprite Holdings vs. Zijin Mining Group | Shoprite Holdings vs. Nucletron Electronic Aktiengesellschaft | Shoprite Holdings vs. METHODE ELECTRONICS |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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