Correlation Between Silicon Motion and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and BW OFFSHORE 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 BW OFFSHORE 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 BW OFFSHORE LTD, you can compare the effects of market volatilities on Silicon Motion and BW OFFSHORE 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 BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and BW OFFSHORE.
Diversification Opportunities for Silicon Motion and BW OFFSHORE
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Silicon and XY81 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of Silicon Motion i.e., Silicon Motion and BW OFFSHORE go up and down completely randomly.
Pair Corralation between Silicon Motion and BW OFFSHORE
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 0.8 times more return on investment than BW OFFSHORE. However, Silicon Motion Technology is 1.26 times less risky than BW OFFSHORE. It trades about 0.13 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about -0.06 per unit of risk. If you would invest 4,772 in Silicon Motion Technology on September 4, 2024 and sell it today you would earn a total of 328.00 from holding Silicon Motion Technology or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Silicon Motion Technology vs. BW OFFSHORE LTD
Performance |
| Timeline |
| Silicon Motion Technology |
| BW OFFSHORE LTD |
Silicon Motion and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and BW OFFSHORE
The main advantage of trading using opposite Silicon Motion and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, BW OFFSHORE 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 BW OFFSHORE will offset losses from the drop in BW OFFSHORE's long position.| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
| BW OFFSHORE vs. Fukuyama Transporting Co | BW OFFSHORE vs. Gold Road Resources | BW OFFSHORE vs. PACIFIC ONLINE | BW OFFSHORE vs. Lamar Advertising |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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