Correlation Between MACOM Technology and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Silicon Motion Technology, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Silicon Motion.
Diversification Opportunities for MACOM Technology and Silicon Motion
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MACOM and Silicon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions 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 MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Silicon Motion go up and down completely randomly.
Pair Corralation between MACOM Technology and Silicon Motion
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 1.41 times more return on investment than Silicon Motion. However, MACOM Technology is 1.41 times more volatile than Silicon Motion Technology. It trades about 0.18 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.01 per unit of risk. If you would invest 11,557 in MACOM Technology Solutions on August 24, 2024 and sell it today you would earn a total of 1,799 from holding MACOM Technology Solutions or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Silicon Motion Technology
Performance |
| Timeline |
| MACOM Technology Sol |
| Silicon Motion Technology |
MACOM Technology and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Silicon Motion
The main advantage of trading using opposite MACOM Technology and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. Eshallgo Class A | MACOM Technology vs. Amtech Systems | MACOM Technology vs. Gold Fields Ltd | MACOM Technology vs. Aegean Airlines SA |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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