Correlation Between Silicon Motion and NLIGHT
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and NLIGHT 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 NLIGHT 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 nLIGHT Inc, you can compare the effects of market volatilities on Silicon Motion and NLIGHT 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 NLIGHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and NLIGHT.
Diversification Opportunities for Silicon Motion and NLIGHT
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Silicon and NLIGHT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT 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 NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of Silicon Motion i.e., Silicon Motion and NLIGHT go up and down completely randomly.
Pair Corralation between Silicon Motion and NLIGHT
Given the investment horizon of 90 days Silicon Motion Technology is expected to generate 0.44 times more return on investment than NLIGHT. However, Silicon Motion Technology is 2.27 times less risky than NLIGHT. It trades about 0.0 of its potential returns per unit of risk. nLIGHT Inc is currently generating about -0.08 per unit of risk. If you would invest 5,616 in Silicon Motion Technology on August 27, 2024 and sell it today you would lose (35.00) from holding Silicon Motion Technology or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. nLIGHT Inc
Performance |
| Timeline |
| Silicon Motion Technology |
| nLIGHT Inc |
Silicon Motion and NLIGHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and NLIGHT
The main advantage of trading using opposite Silicon Motion and NLIGHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, NLIGHT 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 NLIGHT will offset losses from the drop in NLIGHT'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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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