Correlation Between Silicon Motion and SCIENCE IN

Can any of the company-specific risk be diversified away by investing in both Silicon Motion and SCIENCE IN 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 SCIENCE IN 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 SCIENCE IN SPORT, you can compare the effects of market volatilities on Silicon Motion and SCIENCE IN 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 SCIENCE IN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and SCIENCE IN.

Diversification Opportunities for Silicon Motion and SCIENCE IN

-0.2

Correlation Coefficient

Silicon Motion  SCIENCE IN

Good diversification

The 3 months correlation between Silicon and SCIENCE is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and SCIENCE IN SPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCIENCE IN SPORT 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 SCIENCE IN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCIENCE IN SPORT has no effect on the direction of Silicon Motion i.e., Silicon Motion and SCIENCE IN go up and down completely randomly.

Pair Corralation between Silicon Motion and SCIENCE IN

Assuming the 90 days trading horizon Silicon Motion is expected to generate 46.67 times less return on investment than SCIENCE IN. But when comparing it to its historical volatility, Silicon Motion Technology is 2.36 times less risky than SCIENCE IN. It trades about 0.0 of its potential returns per unit of risk. SCIENCE IN SPORT is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14.00  in SCIENCE IN SPORT on October 3, 2024 and sell it today you would earn a total of  15.00  from holding SCIENCE IN SPORT or generate 107.14% 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.  SCIENCE IN SPORT

Silicon Motion Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silicon Motion Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Silicon Motion is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SCIENCE IN SPORT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCIENCE IN SPORT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SCIENCE IN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicon Motion and SCIENCE IN

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

The idea behind Silicon Motion Technology and SCIENCE IN SPORT 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..