Correlation Between Everlight Electronics and Silicon Integrated

Can any of the company-specific risk be diversified away by investing in both Everlight Electronics and Silicon Integrated 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 Everlight Electronics and Silicon Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Everlight Electronics Co and Silicon Integrated Systems, you can compare the effects of market volatilities on Everlight Electronics and Silicon Integrated 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 Everlight Electronics with a short position of Silicon Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everlight Electronics and Silicon Integrated.

Diversification Opportunities for Everlight Electronics and Silicon Integrated

0.21

Correlation Coefficient

Everlight Electronics  Silicon Integrated

Modest diversification

The 3 months correlation between Everlight and Silicon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Everlight Electronics Co and Silicon Integrated Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Integrated and Everlight Electronics 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 Everlight Electronics Co are associated (or correlated) with Silicon Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Integrated has no effect on the direction of Everlight Electronics i.e., Everlight Electronics and Silicon Integrated go up and down completely randomly.

Pair Corralation between Everlight Electronics and Silicon Integrated

Assuming the 90 days trading horizon Everlight Electronics Co is expected to generate 0.97 times more return on investment than Silicon Integrated. However, Everlight Electronics Co is 1.03 times less risky than Silicon Integrated. It trades about 0.13 of its potential returns per unit of risk. Silicon Integrated Systems is currently generating about 0.05 per unit of risk. If you would invest  7,760  in Everlight Electronics Co on September 15, 2024 and sell it today you would earn a total of  390.00  from holding Everlight Electronics Co or generate 5.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Everlight Electronics Co  vs.  Silicon Integrated Systems

Everlight Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everlight Electronics Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Everlight Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Silicon Integrated

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Integrated Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Silicon Integrated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everlight Electronics and Silicon Integrated

The main advantage of trading using opposite Everlight Electronics and Silicon Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everlight Electronics position performs unexpectedly, Silicon Integrated 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 Integrated will offset losses from the drop in Silicon Integrated's long position.

The idea behind Everlight Electronics Co and Silicon Integrated Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.