Correlation Between Silicon Motion and EMCORE
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and EMCORE 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 EMCORE 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 EMCORE, you can compare the effects of market volatilities on Silicon Motion and EMCORE 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 EMCORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and EMCORE.
Diversification Opportunities for Silicon Motion and EMCORE
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and EMCORE is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE 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 EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Silicon Motion i.e., Silicon Motion and EMCORE go up and down completely randomly.
Pair Corralation between Silicon Motion and EMCORE
Given the investment horizon of 90 days Silicon Motion Technology is expected to under-perform the EMCORE. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Motion Technology is 2.28 times less risky than EMCORE. The stock trades about -0.08 of its potential returns per unit of risk. The EMCORE is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 201.00 in EMCORE on August 31, 2024 and sell it today you would earn a total of 97.00 from holding EMCORE or generate 48.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. EMCORE
Performance |
| Timeline |
| Silicon Motion Technology |
| EMCORE |
Silicon Motion and EMCORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and EMCORE
The main advantage of trading using opposite Silicon Motion and EMCORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, EMCORE 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 EMCORE will offset losses from the drop in EMCORE's long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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