Correlation Between Silicon Motion and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on Silicon Motion and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Kaiser Aluminum.
Diversification Opportunities for Silicon Motion and Kaiser Aluminum
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicon and Kaiser is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Silicon Motion i.e., Silicon Motion and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Silicon Motion and Kaiser Aluminum
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the Kaiser Aluminum. In addition to that, Silicon Motion is 1.25 times more volatile than Kaiser Aluminum. It trades about -0.05 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.06 per unit of volatility. If you would invest 6,525 in Kaiser Aluminum on December 30, 2024 and sell it today you would lose (525.00) from holding Kaiser Aluminum or give up 8.05% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Silicon Motion Technology vs. Kaiser Aluminum
Performance |
Timeline |
Silicon Motion Technology |
Kaiser Aluminum |
Silicon Motion and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Silicon Motion and Kaiser Aluminum
The main advantage of trading using opposite Silicon Motion and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.Silicon Motion vs. Axfood AB | Silicon Motion vs. Ebro Foods SA | Silicon Motion vs. Nomad Foods | Silicon Motion vs. Goodyear Tire Rubber |
Kaiser Aluminum vs. AWILCO DRILLING PLC | Kaiser Aluminum vs. Pembina Pipeline Corp | Kaiser Aluminum vs. AEON METALS LTD | Kaiser Aluminum vs. The Boston Beer |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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