Correlation Between Silicon Motion and Power Integrations
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Power Integrations 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 Power Integrations 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 Power Integrations, you can compare the effects of market volatilities on Silicon Motion and Power Integrations 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 Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Power Integrations.
Diversification Opportunities for Silicon Motion and Power Integrations
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Silicon and Power is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of Silicon Motion i.e., Silicon Motion and Power Integrations go up and down completely randomly.
Pair Corralation between Silicon Motion and Power Integrations
Given the investment horizon of 90 days Silicon Motion Technology is expected to generate 0.93 times more return on investment than Power Integrations. However, Silicon Motion Technology is 1.08 times less risky than Power Integrations. It trades about 0.0 of its potential returns per unit of risk. Power Integrations is currently generating about -0.02 per unit of risk. If you would invest 5,696 in Silicon Motion Technology on August 26, 2024 and sell it today you would lose (203.00) from holding Silicon Motion Technology or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Power Integrations
Performance |
| Timeline |
| Silicon Motion Technology |
| Power Integrations |
Silicon Motion and Power Integrations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Power Integrations
The main advantage of trading using opposite Silicon Motion and Power Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Power Integrations 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 Power Integrations will offset losses from the drop in Power Integrations' long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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