Correlation Between Silicon Motion and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Shin Etsu 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 Shin Etsu 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 Shin Etsu Chemical Co, you can compare the effects of market volatilities on Silicon Motion and Shin Etsu 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 Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Shin Etsu.
Diversification Opportunities for Silicon Motion and Shin Etsu
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and Shin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu Chemical 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 Shin Etsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Etsu Chemical has no effect on the direction of Silicon Motion i.e., Silicon Motion and Shin Etsu go up and down completely randomly.
Pair Corralation between Silicon Motion and Shin Etsu
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.51 times more return on investment than Shin Etsu. However, Silicon Motion is 1.51 times more volatile than Shin Etsu Chemical Co. It trades about 0.17 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.02 per unit of risk. If you would invest 4,871 in Silicon Motion Technology on September 12, 2024 and sell it today you would earn a total of 479.00 from holding Silicon Motion Technology or generate 9.83% 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. Shin Etsu Chemical Co
Performance |
| Timeline |
| Silicon Motion Technology |
| Shin Etsu Chemical |
Silicon Motion and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Shin Etsu
The main advantage of trading using opposite Silicon Motion and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Shin Etsu 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 Shin Etsu will offset losses from the drop in Shin Etsu's long position.| Silicon Motion vs. Verizon Communications | Silicon Motion vs. Singapore Telecommunications Limited | Silicon Motion vs. Fair Isaac Corp | Silicon Motion vs. Internet Thailand PCL |
| Shin Etsu vs. AIR LIQUIDE ADR | Shin Etsu vs. Ganfeng Lithium Co | Shin Etsu vs. Superior Plus Corp | Shin Etsu 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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