Correlation Between Sims Metal and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Sims Metal 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 Sims Metal and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Silicon Motion Technology, you can compare the effects of market volatilities on Sims Metal 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 Sims Metal with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Silicon Motion.
Diversification Opportunities for Sims Metal and Silicon Motion
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sims and Silicon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management 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 Sims Metal 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 Sims Metal Management 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 Sims Metal i.e., Sims Metal and Silicon Motion go up and down completely randomly.
Pair Corralation between Sims Metal and Silicon Motion
Assuming the 90 days horizon Sims Metal Management is expected to generate 0.47 times more return on investment than Silicon Motion. However, Sims Metal Management is 2.11 times less risky than Silicon Motion. It trades about 0.41 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.16 per unit of risk. If you would invest 775.00 in Sims Metal Management on December 1, 2024 and sell it today you would earn a total of 85.00 from holding Sims Metal Management or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. Silicon Motion Technology
Performance |
| Timeline |
| Sims Metal Management |
| Silicon Motion Technology |
Sims Metal and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Silicon Motion
The main advantage of trading using opposite Sims Metal and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal 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.| Sims Metal vs. GRENKELEASING Dusseldorf | Sims Metal vs. WILLIS LEASE FIN | Sims Metal vs. ALBIS LEASING AG | Sims Metal vs. United Rentals |
| Silicon Motion vs. DISTRICT METALS | Silicon Motion vs. AEON STORES | Silicon Motion vs. Stag Industrial | Silicon Motion vs. BURLINGTON STORES |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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