Correlation Between Silicon Motion and HP
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and HP 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 HP 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 HP Inc, you can compare the effects of market volatilities on Silicon Motion and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and HP.
Diversification Opportunities for Silicon Motion and HP
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and HP is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Silicon Motion i.e., Silicon Motion and HP go up and down completely randomly.
Pair Corralation between Silicon Motion and HP
Assuming the 90 days trading horizon Silicon Motion is expected to generate 3.45 times less return on investment than HP. But when comparing it to its historical volatility, Silicon Motion Technology is 1.05 times less risky than HP. It trades about 0.02 of its potential returns per unit of risk. HP Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,356 in HP Inc on August 25, 2024 and sell it today you would earn a total of 1,263 from holding HP Inc or generate 53.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. HP Inc
Performance |
| Timeline |
| Silicon Motion Technology |
| HP Inc |
Silicon Motion and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and HP
The main advantage of trading using opposite Silicon Motion and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
| HP vs. Performance Food Group | HP vs. SHIN ETSU CHEMICAL | HP vs. Mitsui Chemicals | HP vs. Silicon Motion Technology |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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