Correlation Between Mitsui Chemicals and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals 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 Mitsui Chemicals and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Silicon Motion Technology, you can compare the effects of market volatilities on Mitsui Chemicals 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 Mitsui Chemicals with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Silicon Motion.
Diversification Opportunities for Mitsui Chemicals and Silicon Motion
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsui and Silicon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals i.e., Mitsui Chemicals and Silicon Motion go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Silicon Motion
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.7 times more return on investment than Silicon Motion. However, Mitsui Chemicals is 1.43 times less risky than Silicon Motion. It trades about -0.1 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about -0.08 per unit of risk. If you would invest 2,420 in Mitsui Chemicals on September 2, 2024 and sell it today you would lose (260.00) from holding Mitsui Chemicals or give up 10.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. Silicon Motion Technology
Performance |
| Timeline |
| Mitsui Chemicals |
| Silicon Motion Technology |
Mitsui Chemicals and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Silicon Motion
The main advantage of trading using opposite Mitsui Chemicals and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals 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.| Mitsui Chemicals vs. SIVERS SEMICONDUCTORS AB | Mitsui Chemicals vs. Darden Restaurants | Mitsui Chemicals vs. Reliance Steel Aluminum | Mitsui Chemicals vs. Q2M Managementberatung AG |
| Silicon Motion vs. CVS Health | Silicon Motion vs. Coor Service Management | Silicon Motion vs. Sabra Health Care | Silicon Motion vs. IMPERIAL TOBACCO |
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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