Correlation Between Silicon Motion and STHREE PLC
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and STHREE PLC 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 STHREE PLC 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 STHREE PLC LS, you can compare the effects of market volatilities on Silicon Motion and STHREE PLC 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 STHREE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and STHREE PLC.
Diversification Opportunities for Silicon Motion and STHREE PLC
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Silicon and STHREE is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and STHREE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STHREE PLC LS 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 STHREE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STHREE PLC LS has no effect on the direction of Silicon Motion i.e., Silicon Motion and STHREE PLC go up and down completely randomly.
Pair Corralation between Silicon Motion and STHREE PLC
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.85 times more return on investment than STHREE PLC. However, Silicon Motion is 1.85 times more volatile than STHREE PLC LS. It trades about -0.02 of its potential returns per unit of risk. STHREE PLC LS is currently generating about -0.05 per unit of risk. If you would invest 5,494 in Silicon Motion Technology on September 5, 2024 and sell it today you would lose (194.00) from holding Silicon Motion Technology or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. STHREE PLC LS
Performance |
| Timeline |
| Silicon Motion Technology |
| STHREE PLC LS |
Silicon Motion and STHREE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and STHREE PLC
The main advantage of trading using opposite Silicon Motion and STHREE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, STHREE PLC 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 STHREE PLC will offset losses from the drop in STHREE PLC's long position.| Silicon Motion vs. Liberty Broadband | Silicon Motion vs. Fukuyama Transporting Co | Silicon Motion vs. TITANIUM TRANSPORTGROUP | Silicon Motion vs. SPORTING |
| STHREE PLC vs. Silicon Motion Technology | STHREE PLC vs. Lendlease Group | STHREE PLC vs. China BlueChemical | STHREE PLC vs. KINGBOARD CHEMICAL |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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