Correlation Between SHIN ETSU and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU and Silicon Motion 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 SHIN ETSU and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Silicon Motion Technology, you can compare the effects of market volatilities on SHIN ETSU and Silicon Motion 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 SHIN ETSU with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and Silicon Motion.
Diversification Opportunities for SHIN ETSU and Silicon Motion
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between SHIN and Silicon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology and SHIN ETSU 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 SHIN ETSU CHEMICAL are associated (or correlated) with Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of SHIN ETSU i.e., SHIN ETSU and Silicon Motion go up and down completely randomly.
Pair Corralation between SHIN ETSU and Silicon Motion
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 0.95 times more return on investment than Silicon Motion. However, SHIN ETSU CHEMICAL is 1.05 times less risky than Silicon Motion. It trades about 0.04 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.0 per unit of risk. If you would invest 2,278 in SHIN ETSU CHEMICAL on September 24, 2024 and sell it today you would earn a total of 827.00 from holding SHIN ETSU CHEMICAL or generate 36.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Silicon Motion Technology
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Silicon Motion Technology |
SHIN ETSU and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and Silicon Motion
The main advantage of trading using opposite SHIN ETSU and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU position performs unexpectedly, Silicon Motion 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 Silicon Motion will offset losses from the drop in Silicon Motion's long position.| SHIN ETSU vs. Lendlease Group | SHIN ETSU vs. LION ONE METALS | SHIN ETSU vs. United Rentals | SHIN ETSU vs. TELES Informationstechnologien AG |
| Silicon Motion vs. REGAL ASIAN INVESTMENTS | Silicon Motion vs. ECHO INVESTMENT ZY | Silicon Motion vs. Japan Asia Investment | Silicon Motion vs. Apollo Investment Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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