Correlation Between Silicon Motion and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Reliance Steel 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 Reliance Steel 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 Reliance Steel Aluminum, you can compare the effects of market volatilities on Silicon Motion and Reliance Steel 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 Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Reliance Steel.
Diversification Opportunities for Silicon Motion and Reliance Steel
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Silicon and Reliance is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel 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 Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of Silicon Motion i.e., Silicon Motion and Reliance Steel go up and down completely randomly.
Pair Corralation between Silicon Motion and Reliance Steel
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 2.25 times more return on investment than Reliance Steel. However, Silicon Motion is 2.25 times more volatile than Reliance Steel Aluminum. It trades about -0.03 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about -0.54 per unit of risk. If you would invest 5,250 in Silicon Motion Technology on September 25, 2024 and sell it today you would lose (150.00) from holding Silicon Motion Technology or give up 2.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Silicon Motion Technology vs. Reliance Steel Aluminum
Performance |
Timeline |
Silicon Motion Technology |
Reliance Steel Aluminum |
Silicon Motion and Reliance Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Silicon Motion and Reliance Steel
The main advantage of trading using opposite Silicon Motion and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
Reliance Steel vs. Aozora Bank | Reliance Steel vs. Silicon Motion Technology | Reliance Steel vs. PTT Global Chemical | Reliance Steel vs. Tradegate AG Wertpapierhandelsbank |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |