Correlation Between Silicon Motion and Magic Software
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Magic Software 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 Magic Software 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 Magic Software Enterprises, you can compare the effects of market volatilities on Silicon Motion and Magic Software 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 Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Magic Software.
Diversification Opportunities for Silicon Motion and Magic Software
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and Magic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter 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 Magic Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Software Enter has no effect on the direction of Silicon Motion i.e., Silicon Motion and Magic Software go up and down completely randomly.
Pair Corralation between Silicon Motion and Magic Software
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the Magic Software. In addition to that, Silicon Motion is 1.14 times more volatile than Magic Software Enterprises. It trades about -0.03 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.04 per unit of volatility. If you would invest 1,030 in Magic Software Enterprises on August 29, 2024 and sell it today you would earn a total of 30.00 from holding Magic Software Enterprises or generate 2.91% 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. Magic Software Enterprises
Performance |
| Timeline |
| Silicon Motion Technology |
| Magic Software Enter |
Silicon Motion and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Magic Software
The main advantage of trading using opposite Silicon Motion and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Magic Software 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 Magic Software will offset losses from the drop in Magic Software's long position.| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
| Magic Software vs. Palo Alto Networks | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. SIVERS SEMICONDUCTORS AB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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