Correlation Between Silicon Motion and Option Care
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Option Care 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 Option Care 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 Option Care Health, you can compare the effects of market volatilities on Silicon Motion and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Option Care.
Diversification Opportunities for Silicon Motion and Option Care
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and Option is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Silicon Motion i.e., Silicon Motion and Option Care go up and down completely randomly.
Pair Corralation between Silicon Motion and Option Care
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.55 times more return on investment than Option Care. However, Silicon Motion is 1.55 times more volatile than Option Care Health. It trades about 0.17 of its potential returns per unit of risk. Option Care Health is currently generating about 0.2 per unit of risk. If you would invest 4,775 in Silicon Motion Technology on November 28, 2024 and sell it today you would earn a total of 425.00 from holding Silicon Motion Technology or generate 8.9% 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. Option Care Health
Performance |
| Timeline |
| Silicon Motion Technology |
| Option Care Health |
Silicon Motion and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Option Care
The main advantage of trading using opposite Silicon Motion and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care's long position.| Silicon Motion vs. Compagnie Plastic Omnium | Silicon Motion vs. NORTHISLE PERGOLD INC | Silicon Motion vs. Hyster Yale Materials Handling | Silicon Motion vs. MCEWEN MINING INC |
| Option Care vs. Harmony Gold Mining | Option Care vs. Coeur Mining | Option Care vs. GOLDQUEST MINING | Option Care vs. SERI INDUSTRIAL EO |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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