Correlation Between RCM TECHNOLOGIES and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES 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 RCM TECHNOLOGIES and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and Silicon Motion Technology, you can compare the effects of market volatilities on RCM TECHNOLOGIES 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 RCM TECHNOLOGIES with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and Silicon Motion.
Diversification Opportunities for RCM TECHNOLOGIES and Silicon Motion
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between RCM and Silicon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and Silicon Motion go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and Silicon Motion
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 3.14 times less return on investment than Silicon Motion. But when comparing it to its historical volatility, RCM TECHNOLOGIES is 1.22 times less risky than Silicon Motion. It trades about 0.12 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,760 in Silicon Motion Technology on September 19, 2024 and sell it today you would earn a total of 840.00 from holding Silicon Motion Technology or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
RCM TECHNOLOGIES vs. Silicon Motion Technology
Performance |
| Timeline |
| RCM TECHNOLOGIES |
| Silicon Motion Technology |
RCM TECHNOLOGIES and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCM TECHNOLOGIES and Silicon Motion
The main advantage of trading using opposite RCM TECHNOLOGIES and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES 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.| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc |
| Silicon Motion vs. RCM TECHNOLOGIES | Silicon Motion vs. MeVis Medical Solutions | Silicon Motion vs. CVR Medical Corp | Silicon Motion vs. Clearside Biomedical |
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
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |