Correlation Between Silicon Motion and Infinera
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Infinera 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 Infinera 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 Infinera, you can compare the effects of market volatilities on Silicon Motion and Infinera 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 Infinera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Infinera.
Diversification Opportunities for Silicon Motion and Infinera
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and Infinera is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Infinera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinera 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 Infinera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinera has no effect on the direction of Silicon Motion i.e., Silicon Motion and Infinera go up and down completely randomly.
Pair Corralation between Silicon Motion and Infinera
Given the investment horizon of 90 days Silicon Motion is expected to generate 4.03 times less return on investment than Infinera. But when comparing it to its historical volatility, Silicon Motion Technology is 1.24 times less risky than Infinera. It trades about 0.01 of its potential returns per unit of risk. Infinera is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 639.00 in Infinera on August 28, 2024 and sell it today you would earn a total of 23.00 from holding Infinera or generate 3.6% 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. Infinera
Performance |
| Timeline |
| Silicon Motion Technology |
| Infinera |
Silicon Motion and Infinera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Infinera
The main advantage of trading using opposite Silicon Motion and Infinera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Infinera 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 Infinera will offset losses from the drop in Infinera's long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
| Infinera vs. Ichor Holdings | Infinera vs. Fabrinet | Infinera vs. Hello Group | Infinera vs. Ultra Clean Holdings |
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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