Correlation Between Silicon Motion and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and MELIA HOTELS 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 MELIA HOTELS 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 MELIA HOTELS, you can compare the effects of market volatilities on Silicon Motion and MELIA HOTELS 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and MELIA HOTELS.
Diversification Opportunities for Silicon Motion and MELIA HOTELS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and MELIA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS 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 MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of Silicon Motion i.e., Silicon Motion and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Silicon Motion and MELIA HOTELS
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the MELIA HOTELS. In addition to that, Silicon Motion is 1.58 times more volatile than MELIA HOTELS. It trades about -0.01 of its total potential returns per unit of risk. MELIA HOTELS is currently generating about 0.03 per unit of volatility. If you would invest 686.00 in MELIA HOTELS on October 30, 2024 and sell it today you would earn a total of 9.00 from holding MELIA HOTELS or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. MELIA HOTELS
Performance |
| Timeline |
| Silicon Motion Technology |
| MELIA HOTELS |
Silicon Motion and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and MELIA HOTELS
The main advantage of trading using opposite Silicon Motion and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, MELIA HOTELS 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS's long position.| Silicon Motion vs. AOI Electronics Co | Silicon Motion vs. Delta Electronics Public | Silicon Motion vs. MOUNT GIBSON IRON | Silicon Motion vs. ELL ENVIRONHLDGS HD 0001 |
| MELIA HOTELS vs. UPDATE SOFTWARE | MELIA HOTELS vs. Kingdee International Software | MELIA HOTELS vs. Mount Gibson Iron | MELIA HOTELS vs. RELIANCE STEEL AL |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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