Correlation Between Silicon Power and Hotel Royal

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

By analyzing existing cross correlation between Silicon Power Computer and Hotel Royal Chihpen, you can compare the effects of market volatilities on Silicon Power and Hotel Royal 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 Power with a short position of Hotel Royal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Power and Hotel Royal.

Diversification Opportunities for Silicon Power and Hotel Royal

-0.25

Correlation Coefficient

Silicon Power  Hotel Royal

Very good diversification

The 3 months correlation between Silicon and Hotel is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Power Computer and Hotel Royal Chihpen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Royal Chihpen and Silicon Power 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 Power Computer are associated (or correlated) with Hotel Royal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Royal Chihpen has no effect on the direction of Silicon Power i.e., Silicon Power and Hotel Royal go up and down completely randomly.

Pair Corralation between Silicon Power and Hotel Royal

Assuming the 90 days trading horizon Silicon Power Computer is expected to generate 1.05 times more return on investment than Hotel Royal. However, Silicon Power is 1.05 times more volatile than Hotel Royal Chihpen. It trades about 0.07 of its potential returns per unit of risk. Hotel Royal Chihpen is currently generating about -0.05 per unit of risk. If you would invest  3,060  in Silicon Power Computer on December 23, 2024 and sell it today you would earn a total of  210.00  from holding Silicon Power Computer or generate 6.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Silicon Power Computer  vs.  Hotel Royal Chihpen

Silicon Power Computer

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Power Computer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Silicon Power may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hotel Royal Chihpen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hotel Royal Chihpen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Silicon Power and Hotel Royal

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

The idea behind Silicon Power Computer and Hotel Royal Chihpen 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.