Correlation Between Silicon Motion and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Silicon Motion and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Merit Medical.
Diversification Opportunities for Silicon Motion and Merit Medical
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and Merit is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Silicon Motion i.e., Silicon Motion and Merit Medical go up and down completely randomly.
Pair Corralation between Silicon Motion and Merit Medical
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the Merit Medical. In addition to that, Silicon Motion is 1.4 times more volatile than Merit Medical Systems. It trades about -0.05 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.38 per unit of volatility. If you would invest 9,150 in Merit Medical Systems on November 6, 2024 and sell it today you would earn a total of 1,150 from holding Merit Medical Systems or generate 12.57% 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. Merit Medical Systems
Performance |
| Timeline |
| Silicon Motion Technology |
| Merit Medical Systems |
Silicon Motion and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Merit Medical
The main advantage of trading using opposite Silicon Motion and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Silicon Motion vs. LG Electronics | Silicon Motion vs. Nucletron Electronic Aktiengesellschaft | Silicon Motion vs. Nanjing Panda Electronics | Silicon Motion vs. Arrow Electronics |
| Merit Medical vs. Scandinavian Tobacco Group | Merit Medical vs. Fidelity National Information | Merit Medical vs. DATADOT TECHNOLOGY | Merit Medical vs. AOI Electronics Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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