Correlation Between Qisda Corp and Silicon Power

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

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

Diversification Opportunities for Qisda Corp and Silicon Power

0.36

Correlation Coefficient

Qisda Corp  Silicon Power

Weak diversification

The 3 months correlation between Qisda and Silicon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Qisda Corp and Silicon Power Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Power Computer and Qisda Corp 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 Qisda Corp are associated (or correlated) with Silicon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Power Computer has no effect on the direction of Qisda Corp i.e., Qisda Corp and Silicon Power go up and down completely randomly.

Pair Corralation between Qisda Corp and Silicon Power

Assuming the 90 days trading horizon Qisda Corp is expected to generate 1.75 times less return on investment than Silicon Power. But when comparing it to its historical volatility, Qisda Corp is 1.3 times less risky than Silicon Power. It trades about 0.04 of its potential returns per unit of risk. Silicon Power Computer is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,929  in Silicon Power Computer on September 13, 2024 and sell it today you would earn a total of  1,231  from holding Silicon Power Computer or generate 63.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Qisda Corp  vs.  Silicon Power Computer

Qisda Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qisda Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Qisda Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Silicon Power Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silicon Power Computer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Silicon Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Qisda Corp and Silicon Power

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

The idea behind Qisda Corp and Silicon Power Computer 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.