Correlation Between Silicon Motion and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Sims Metal 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 Sims Metal 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 Sims Metal Management, you can compare the effects of market volatilities on Silicon Motion and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Sims Metal.
Diversification Opportunities for Silicon Motion and Sims Metal
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and Sims is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of Silicon Motion i.e., Silicon Motion and Sims Metal go up and down completely randomly.
Pair Corralation between Silicon Motion and Sims Metal
Assuming the 90 days trading horizon Silicon Motion is expected to generate 3.06 times less return on investment than Sims Metal. In addition to that, Silicon Motion is 1.07 times more volatile than Sims Metal Management. It trades about 0.04 of its total potential returns per unit of risk. Sims Metal Management is currently generating about 0.15 per unit of volatility. If you would invest 755.00 in Sims Metal Management on September 1, 2024 and sell it today you would earn a total of 55.00 from holding Sims Metal Management or generate 7.28% 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. Sims Metal Management
Performance |
| Timeline |
| Silicon Motion Technology |
| Sims Metal Management |
Silicon Motion and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Sims Metal
The main advantage of trading using opposite Silicon Motion and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| Silicon Motion vs. Norwegian Air Shuttle | Silicon Motion vs. WIZZ AIR HLDGUNSPADR4 | Silicon Motion vs. ELMOS SEMICONDUCTOR | Silicon Motion vs. Enter Air SA |
| Sims Metal vs. Guidewire Software | Sims Metal vs. GREENX METALS LTD | Sims Metal vs. HK Electric Investments | Sims Metal vs. SEI INVESTMENTS |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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