Correlation Between Silicon Motion and Japan Asia
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Japan Asia 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 Japan Asia 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 Japan Asia Investment, you can compare the effects of market volatilities on Silicon Motion and Japan Asia 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 Japan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Japan Asia.
Diversification Opportunities for Silicon Motion and Japan Asia
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and Japan is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Japan Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Asia Investment 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 Japan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Asia Investment has no effect on the direction of Silicon Motion i.e., Silicon Motion and Japan Asia go up and down completely randomly.
Pair Corralation between Silicon Motion and Japan Asia
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.83 times more return on investment than Japan Asia. However, Silicon Motion is 1.83 times more volatile than Japan Asia Investment. It trades about -0.02 of its potential returns per unit of risk. Japan Asia Investment is currently generating about -0.07 per unit of risk. If you would invest 5,350 in Silicon Motion Technology on October 13, 2024 and sell it today you would lose (100.00) from holding Silicon Motion Technology or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Japan Asia Investment
Performance |
| Timeline |
| Silicon Motion Technology |
| Japan Asia Investment |
Silicon Motion and Japan Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Japan Asia
The main advantage of trading using opposite Silicon Motion and Japan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Japan Asia 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 Japan Asia will offset losses from the drop in Japan Asia's long position.| Silicon Motion vs. ONWARD MEDICAL BV | Silicon Motion vs. INDOFOOD AGRI RES | Silicon Motion vs. TYSON FOODS A | Silicon Motion vs. Lifeway Foods |
| Japan Asia vs. Ameriprise Financial | Japan Asia vs. PNC Financial Services | Japan Asia vs. COSMOSTEEL HLDGS | Japan Asia vs. ANGANG STEEL H |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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