Correlation Between Silicon Motion and SUN ART
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and SUN ART 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 SUN ART 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 SUN ART RETAIL, you can compare the effects of market volatilities on Silicon Motion and SUN ART 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 SUN ART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and SUN ART.
Diversification Opportunities for Silicon Motion and SUN ART
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Silicon and SUN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and SUN ART RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN ART RETAIL 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 SUN ART. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN ART RETAIL has no effect on the direction of Silicon Motion i.e., Silicon Motion and SUN ART go up and down completely randomly.
Pair Corralation between Silicon Motion and SUN ART
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 0.29 times more return on investment than SUN ART. However, Silicon Motion Technology is 3.41 times less risky than SUN ART. It trades about -0.22 of its potential returns per unit of risk. SUN ART RETAIL is currently generating about -0.32 per unit of risk. If you would invest 5,200 in Silicon Motion Technology on October 30, 2024 and sell it today you would lose (380.00) from holding Silicon Motion Technology or give up 7.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. SUN ART RETAIL
Performance |
| Timeline |
| Silicon Motion Technology |
| SUN ART RETAIL |
Silicon Motion and SUN ART Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and SUN ART
The main advantage of trading using opposite Silicon Motion and SUN ART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, SUN ART 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 SUN ART will offset losses from the drop in SUN ART's long position.| Silicon Motion vs. AOI Electronics Co | Silicon Motion vs. Delta Electronics Public | Silicon Motion vs. MOUNT GIBSON IRON | Silicon Motion vs. ELL ENVIRONHLDGS HD 0001 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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