Correlation Between Silicon Motion and Semtech
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Semtech 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 Semtech 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 Semtech, you can compare the effects of market volatilities on Silicon Motion and Semtech 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 Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Semtech.
Diversification Opportunities for Silicon Motion and Semtech
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Silicon and Semtech is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Silicon Motion i.e., Silicon Motion and Semtech go up and down completely randomly.
Pair Corralation between Silicon Motion and Semtech
Given the investment horizon of 90 days Silicon Motion is expected to generate 57.87 times less return on investment than Semtech. But when comparing it to its historical volatility, Silicon Motion Technology is 1.79 times less risky than Semtech. It trades about 0.0 of its potential returns per unit of risk. Semtech is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,637 in Semtech on August 26, 2024 and sell it today you would earn a total of 3,452 from holding Semtech or generate 210.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Semtech
Performance |
| Timeline |
| Silicon Motion Technology |
| Semtech |
Silicon Motion and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Semtech
The main advantage of trading using opposite Silicon Motion and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech's long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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