Correlation Between Silicon Motion and ICICI Bank
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and ICICI Bank 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 ICICI Bank 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 ICICI Bank Limited, you can compare the effects of market volatilities on Silicon Motion and ICICI Bank 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 ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and ICICI Bank.
Diversification Opportunities for Silicon Motion and ICICI Bank
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and ICICI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and ICICI Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Bank Limited 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 ICICI Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Bank Limited has no effect on the direction of Silicon Motion i.e., Silicon Motion and ICICI Bank go up and down completely randomly.
Pair Corralation between Silicon Motion and ICICI Bank
Assuming the 90 days trading horizon Silicon Motion is expected to generate 2.25 times less return on investment than ICICI Bank. In addition to that, Silicon Motion is 1.09 times more volatile than ICICI Bank Limited. It trades about 0.03 of its total potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.07 per unit of volatility. If you would invest 2,080 in ICICI Bank Limited on September 12, 2024 and sell it today you would earn a total of 860.00 from holding ICICI Bank Limited or generate 41.35% 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. ICICI Bank Limited
Performance |
| Timeline |
| Silicon Motion Technology |
| ICICI Bank Limited |
Silicon Motion and ICICI Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and ICICI Bank
The main advantage of trading using opposite Silicon Motion and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, ICICI Bank 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 ICICI Bank will offset losses from the drop in ICICI Bank's long position.| Silicon Motion vs. Verizon Communications | Silicon Motion vs. Singapore Telecommunications Limited | Silicon Motion vs. Fair Isaac Corp | Silicon Motion vs. Internet Thailand PCL |
| ICICI Bank vs. Zijin Mining Group | ICICI Bank vs. Eastman Chemical | ICICI Bank vs. TIANDE CHEMICAL | ICICI Bank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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