Correlation Between STHREE PLC and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both STHREE PLC 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 STHREE PLC and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STHREE PLC LS and Silicon Motion Technology, you can compare the effects of market volatilities on STHREE PLC 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 STHREE PLC with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of STHREE PLC and Silicon Motion.
Diversification Opportunities for STHREE PLC and Silicon Motion
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STHREE and Silicon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding STHREE PLC LS 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 STHREE PLC 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 STHREE PLC LS 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 STHREE PLC i.e., STHREE PLC and Silicon Motion go up and down completely randomly.
Pair Corralation between STHREE PLC and Silicon Motion
Assuming the 90 days horizon STHREE PLC LS is expected to generate 0.76 times more return on investment than Silicon Motion. However, STHREE PLC LS is 1.32 times less risky than Silicon Motion. It trades about 0.01 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 427.00 in STHREE PLC LS on September 5, 2024 and sell it today you would earn a total of 0.00 from holding STHREE PLC LS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
STHREE PLC LS vs. Silicon Motion Technology
Performance |
| Timeline |
| STHREE PLC LS |
| Silicon Motion Technology |
STHREE PLC and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STHREE PLC and Silicon Motion
The main advantage of trading using opposite STHREE PLC and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STHREE PLC 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.| STHREE PLC vs. Silicon Motion Technology | STHREE PLC vs. Lendlease Group | STHREE PLC vs. China BlueChemical | STHREE PLC vs. KINGBOARD CHEMICAL |
| Silicon Motion vs. Liberty Broadband | Silicon Motion vs. Fukuyama Transporting Co | Silicon Motion vs. TITANIUM TRANSPORTGROUP | Silicon Motion vs. SPORTING |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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