Correlation Between Silicon Motion and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Avanos Medical 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 Avanos Medical 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 Avanos Medical, you can compare the effects of market volatilities on Silicon Motion and Avanos Medical 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 Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Avanos Medical.
Diversification Opportunities for Silicon Motion and Avanos Medical
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Silicon and Avanos is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical 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 Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of Silicon Motion i.e., Silicon Motion and Avanos Medical go up and down completely randomly.
Pair Corralation between Silicon Motion and Avanos Medical
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.63 times more return on investment than Avanos Medical. However, Silicon Motion is 1.63 times more volatile than Avanos Medical. It trades about 0.05 of its potential returns per unit of risk. Avanos Medical is currently generating about -0.35 per unit of risk. If you would invest 5,200 in Silicon Motion Technology on October 7, 2024 and sell it today you would earn a total of 100.00 from holding Silicon Motion Technology or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Avanos Medical
Performance |
| Timeline |
| Silicon Motion Technology |
| Avanos Medical |
Silicon Motion and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Avanos Medical
The main advantage of trading using opposite Silicon Motion and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
| Avanos Medical vs. Singapore Telecommunications Limited | Avanos Medical vs. WIMFARM SA EO | Avanos Medical vs. ecotel communication ag | Avanos Medical vs. North American Construction |
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.
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