Correlation Between Silicon Motion and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Tower Semiconductor 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 Tower Semiconductor 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 Tower Semiconductor, you can compare the effects of market volatilities on Silicon Motion and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Tower Semiconductor.
Diversification Opportunities for Silicon Motion and Tower Semiconductor
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and Tower is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Silicon Motion i.e., Silicon Motion and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Silicon Motion and Tower Semiconductor
Given the investment horizon of 90 days Silicon Motion Technology is expected to under-perform the Tower Semiconductor. In addition to that, Silicon Motion is 1.33 times more volatile than Tower Semiconductor. It trades about 0.0 of its total potential returns per unit of risk. Tower Semiconductor is currently generating about 0.01 per unit of volatility. If you would invest 4,638 in Tower Semiconductor on September 3, 2024 and sell it today you would earn a total of 75.00 from holding Tower Semiconductor or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Tower Semiconductor
Performance |
| Timeline |
| Silicon Motion Technology |
| Tower Semiconductor |
Silicon Motion and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Tower Semiconductor
The main advantage of trading using opposite Silicon Motion and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
| Tower Semiconductor vs. Silicon Motion Technology | Tower Semiconductor vs. ASE Industrial Holding | Tower Semiconductor vs. SemiLEDS | Tower Semiconductor vs. Himax Technologies |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Transaction History View history of all your transactions and understand their impact on performance |