Correlation Between Silicom and Franklin Wireless

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Can any of the company-specific risk be diversified away by investing in both Silicom and Franklin Wireless 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 Silicom and Franklin Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicom and Franklin Wireless Corp, you can compare the effects of market volatilities on Silicom and Franklin Wireless 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 Silicom with a short position of Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicom and Franklin Wireless.

Diversification Opportunities for Silicom and Franklin Wireless

SilicomFranklinDiversified AwaySilicomFranklinDiversified Away100%
0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Silicom and Franklin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Silicom and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp and Silicom 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 Silicom are associated (or correlated) with Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Silicom i.e., Silicom and Franklin Wireless go up and down completely randomly.

Pair Corralation between Silicom and Franklin Wireless

Given the investment horizon of 90 days Silicom is expected to generate 1.94 times less return on investment than Franklin Wireless. In addition to that, Silicom is 1.35 times more volatile than Franklin Wireless Corp. It trades about 0.1 of its total potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.27 per unit of volatility. If you would invest  413.00  in Franklin Wireless Corp on November 19, 2024 and sell it today you would earn a total of  208.00  from holding Franklin Wireless Corp or generate 50.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Silicom  vs.  Franklin Wireless Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50510152025
JavaScript chart by amCharts 3.21.15SILC FKWL
       Timeline  
Silicom 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Silicom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Silicom exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb131415161718
Franklin Wireless Corp 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb44.555.56

Silicom and Franklin Wireless Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.01-8.25-5.48-2.720.04612.795.678.5611.4414.33 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15SILC FKWL
       Returns  

Pair Trading with Silicom and Franklin Wireless

The main advantage of trading using opposite Silicom and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicom position performs unexpectedly, Franklin Wireless 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 Franklin Wireless will offset losses from the drop in Franklin Wireless' long position.
The idea behind Silicom and Franklin Wireless Corp 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 CEOs Directory module to screen CEOs from public companies around the world.

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