Correlation Between Silicon Motion and Canaan
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Canaan 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 Canaan 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 Canaan Inc, you can compare the effects of market volatilities on Silicon Motion and Canaan 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 Canaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Canaan.
Diversification Opportunities for Silicon Motion and Canaan
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Silicon and Canaan is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc 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 Canaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaan Inc has no effect on the direction of Silicon Motion i.e., Silicon Motion and Canaan go up and down completely randomly.
Pair Corralation between Silicon Motion and Canaan
Given the investment horizon of 90 days Silicon Motion Technology is expected to under-perform the Canaan. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Motion Technology is 3.36 times less risky than Canaan. The stock trades about -0.05 of its potential returns per unit of risk. The Canaan Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 97.00 in Canaan Inc on August 28, 2024 and sell it today you would earn a total of 111.00 from holding Canaan Inc or generate 114.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Canaan Inc
Performance |
| Timeline |
| Silicon Motion Technology |
| Canaan Inc |
Silicon Motion and Canaan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Canaan
The main advantage of trading using opposite Silicon Motion and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Canaan 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 Canaan will offset losses from the drop in Canaan's long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
| Canaan vs. 3D Systems | Canaan vs. NetApp Inc | Canaan vs. Rigetti Computing | Canaan vs. Logitech International SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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