Correlation Between Silicon Motion and MaxLinear
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and MaxLinear 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 MaxLinear 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 MaxLinear, you can compare the effects of market volatilities on Silicon Motion and MaxLinear 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 MaxLinear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and MaxLinear.
Diversification Opportunities for Silicon Motion and MaxLinear
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and MaxLinear is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and MaxLinear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MaxLinear 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 MaxLinear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MaxLinear has no effect on the direction of Silicon Motion i.e., Silicon Motion and MaxLinear go up and down completely randomly.
Pair Corralation between Silicon Motion and MaxLinear
Given the investment horizon of 90 days Silicon Motion is expected to generate 20.8 times less return on investment than MaxLinear. But when comparing it to its historical volatility, Silicon Motion Technology is 1.71 times less risky than MaxLinear. It trades about 0.0 of its potential returns per unit of risk. MaxLinear is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,564 in MaxLinear on August 27, 2024 and sell it today you would earn a total of 23.00 from holding MaxLinear or generate 1.47% 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. MaxLinear
Performance |
| Timeline |
| Silicon Motion Technology |
| MaxLinear |
Silicon Motion and MaxLinear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and MaxLinear
The main advantage of trading using opposite Silicon Motion and MaxLinear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, MaxLinear 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 MaxLinear will offset losses from the drop in MaxLinear'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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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