Correlation Between Silicon Motion and CN MODERN
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and CN MODERN 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 Silicon Motion and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and CN MODERN DAIRY, you can compare the effects of market volatilities on Silicon Motion and CN MODERN 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 Silicon Motion with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and CN MODERN.
Diversification Opportunities for Silicon Motion and CN MODERN
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and 07M is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and Silicon Motion 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 Silicon Motion Technology are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of Silicon Motion i.e., Silicon Motion and CN MODERN go up and down completely randomly.
Pair Corralation between Silicon Motion and CN MODERN
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.66 times more return on investment than CN MODERN. However, Silicon Motion is 1.66 times more volatile than CN MODERN DAIRY. It trades about 0.08 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about -0.19 per unit of risk. If you would invest 5,049 in Silicon Motion Technology on August 28, 2024 and sell it today you would earn a total of 201.00 from holding Silicon Motion Technology or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Silicon Motion Technology vs. CN MODERN DAIRY
Performance |
| Timeline |
| Silicon Motion Technology |
| CN MODERN DAIRY |
Silicon Motion and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and CN MODERN
The main advantage of trading using opposite Silicon Motion and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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