Correlation Between Silicon Motion and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Sinopec Shanghai 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 Sinopec Shanghai 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 Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on Silicon Motion and Sinopec Shanghai 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 Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Sinopec Shanghai.
Diversification Opportunities for Silicon Motion and Sinopec Shanghai
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and Sinopec is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Sinopec Shanghai Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Shanghai Pet 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 Sinopec Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Shanghai Pet has no effect on the direction of Silicon Motion i.e., Silicon Motion and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between Silicon Motion and Sinopec Shanghai
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the Sinopec Shanghai. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Motion Technology is 2.23 times less risky than Sinopec Shanghai. The stock trades about -0.1 of its potential returns per unit of risk. The Sinopec Shanghai Petrochemical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Sinopec Shanghai Petrochemical on August 31, 2024 and sell it today you would earn a total of 2.00 from holding Sinopec Shanghai Petrochemical or generate 15.38% 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. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| Silicon Motion Technology |
| Sinopec Shanghai Pet |
Silicon Motion and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Sinopec Shanghai
The main advantage of trading using opposite Silicon Motion and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Sinopec Shanghai 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 Sinopec Shanghai will offset losses from the drop in Sinopec Shanghai's long position.| Silicon Motion vs. Alfa Financial Software | Silicon Motion vs. Sanyo Chemical Industries | Silicon Motion vs. KINGBOARD CHEMICAL | Silicon Motion vs. Mitsui Chemicals |
| Sinopec Shanghai vs. Superior Plus Corp | Sinopec Shanghai vs. NMI Holdings | Sinopec Shanghai vs. Origin Agritech | Sinopec Shanghai 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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