Correlation Between Silicon Power and Mobiletron Electronics

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

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

Diversification Opportunities for Silicon Power and Mobiletron Electronics

-0.2

Correlation Coefficient

Silicon Power  Mobiletron Electronics

Good diversification

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

Pair Corralation between Silicon Power and Mobiletron Electronics

Assuming the 90 days trading horizon Silicon Power Computer is expected to under-perform the Mobiletron Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Power Computer is 1.05 times less risky than Mobiletron Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The Mobiletron Electronics Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,070  in Mobiletron Electronics Co on September 16, 2024 and sell it today you would lose (120.00) from holding Mobiletron Electronics Co or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Silicon Power Computer  vs.  Mobiletron Electronics Co

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.

Mobiletron Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobiletron Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mobiletron Electronics 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 Silicon Power and Mobiletron Electronics

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

The idea behind Silicon Power Computer and Mobiletron Electronics Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.