Correlation Between Silicon Motion and FormFactor
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and FormFactor 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 FormFactor 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 FormFactor, you can compare the effects of market volatilities on Silicon Motion and FormFactor 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 FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and FormFactor.
Diversification Opportunities for Silicon Motion and FormFactor
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Silicon and FormFactor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor 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 FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Silicon Motion i.e., Silicon Motion and FormFactor go up and down completely randomly.
Pair Corralation between Silicon Motion and FormFactor
Given the investment horizon of 90 days Silicon Motion Technology is expected to generate 0.71 times more return on investment than FormFactor. However, Silicon Motion Technology is 1.42 times less risky than FormFactor. It trades about -0.03 of its potential returns per unit of risk. FormFactor is currently generating about -0.06 per unit of risk. If you would invest 5,646 in Silicon Motion Technology on August 23, 2024 and sell it today you would lose (166.00) from holding Silicon Motion Technology or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. FormFactor
Performance |
| Timeline |
| Silicon Motion Technology |
| FormFactor |
Silicon Motion and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and FormFactor
The main advantage of trading using opposite Silicon Motion and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor's long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
| FormFactor vs. Silicon Laboratories | FormFactor vs. Diodes Incorporated | FormFactor vs. MACOM Technology Solutions | FormFactor vs. Amkor Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |