Correlation Between Sumitomo Chemical and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and Silicon Motion 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 Sumitomo Chemical and Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and Silicon Motion Technology, you can compare the effects of market volatilities on Sumitomo Chemical and Silicon Motion 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 Sumitomo Chemical with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and Silicon Motion.
Diversification Opportunities for Sumitomo Chemical and Silicon Motion
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Silicon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology and Sumitomo Chemical 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 Sumitomo Chemical are associated (or correlated) with Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and Silicon Motion go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and Silicon Motion
Assuming the 90 days horizon Sumitomo Chemical is expected to under-perform the Silicon Motion. In addition to that, Sumitomo Chemical is 1.12 times more volatile than Silicon Motion Technology. It trades about -0.02 of its total potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.0 per unit of volatility. If you would invest 5,839 in Silicon Motion Technology on August 29, 2024 and sell it today you would lose (739.00) from holding Silicon Motion Technology or give up 12.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical vs. Silicon Motion Technology
Performance |
| Timeline |
| Sumitomo Chemical |
| Silicon Motion Technology |
Sumitomo Chemical and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and Silicon Motion
The main advantage of trading using opposite Sumitomo Chemical and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, Silicon Motion 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 Silicon Motion will offset losses from the drop in Silicon Motion's long position.| Sumitomo Chemical vs. Air Liquide SA | Sumitomo Chemical vs. AIR LIQUIDE ADR | Sumitomo Chemical vs. Air Products and | Sumitomo Chemical vs. Shin Etsu Chemical Co |
| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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