Correlation Between Silicon Motion and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Advanced Micro 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 Advanced Micro 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 Advanced Micro Devices, you can compare the effects of market volatilities on Silicon Motion and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Advanced Micro.
Diversification Opportunities for Silicon Motion and Advanced Micro
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and Advanced is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Silicon Motion i.e., Silicon Motion and Advanced Micro go up and down completely randomly.
Pair Corralation between Silicon Motion and Advanced Micro
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the Advanced Micro. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Motion Technology is 1.08 times less risky than Advanced Micro. The stock trades about -0.08 of its potential returns per unit of risk. The Advanced Micro Devices is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 15,286 in Advanced Micro Devices on September 3, 2024 and sell it today you would lose (1,766) from holding Advanced Micro Devices or give up 11.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Advanced Micro Devices
Performance |
| Timeline |
| Silicon Motion Technology |
| Advanced Micro Devices |
Silicon Motion and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Advanced Micro
The main advantage of trading using opposite Silicon Motion and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
| Advanced Micro vs. Information Services International Dentsu | Advanced Micro vs. MagnaChip Semiconductor Corp | Advanced Micro vs. DOCDATA | Advanced Micro vs. Nordic Semiconductor ASA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |