Correlation Between Silicon Motion and Amazon
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on Silicon Motion and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Amazon.
Diversification Opportunities for Silicon Motion and Amazon
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Silicon and Amazon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Silicon Motion i.e., Silicon Motion and Amazon go up and down completely randomly.
Pair Corralation between Silicon Motion and Amazon
Assuming the 90 days trading horizon Silicon Motion is expected to generate 18.98 times less return on investment than Amazon. In addition to that, Silicon Motion is 1.3 times more volatile than Amazon Inc. It trades about 0.0 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of volatility. If you would invest 8,814 in Amazon Inc on November 27, 2024 and sell it today you would earn a total of 11,621 from holding Amazon Inc or generate 131.85% 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. Amazon Inc
Performance |
| Timeline |
| Silicon Motion Technology |
| Amazon Inc |
Silicon Motion and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Amazon
The main advantage of trading using opposite Silicon Motion and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Silicon Motion vs. Aristocrat Leisure Limited | Silicon Motion vs. InPlay Oil Corp | Silicon Motion vs. FARO TECHNOLOGIES | Silicon Motion vs. COLUMBIA SPORTSWEAR |
| Amazon vs. Guangdong Investment Limited | Amazon vs. REGAL ASIAN INVESTMENTS | Amazon vs. Investment AB Latour | Amazon vs. Japan Asia Investment |
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 CEOs Directory module to screen CEOs from public companies around the world.
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