Correlation Between Silicon Motion and TITANIUM TRANSPORTGROUP

Can any of the company-specific risk be diversified away by investing in both Silicon Motion and TITANIUM TRANSPORTGROUP 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 TITANIUM TRANSPORTGROUP 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 TITANIUM TRANSPORTGROUP, you can compare the effects of market volatilities on Silicon Motion and TITANIUM TRANSPORTGROUP 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 TITANIUM TRANSPORTGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and TITANIUM TRANSPORTGROUP.

Diversification Opportunities for Silicon Motion and TITANIUM TRANSPORTGROUP

-0.07

Correlation Coefficient

Silicon Motion  TITANIUM TRANSPORTGROUP

Good diversification

The 3 months correlation between Silicon and TITANIUM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and TITANIUM TRANSPORTGROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITANIUM TRANSPORTGROUP 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 TITANIUM TRANSPORTGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITANIUM TRANSPORTGROUP has no effect on the direction of Silicon Motion i.e., Silicon Motion and TITANIUM TRANSPORTGROUP go up and down completely randomly.

Pair Corralation between Silicon Motion and TITANIUM TRANSPORTGROUP

Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the TITANIUM TRANSPORTGROUP. In addition to that, Silicon Motion is 1.0 times more volatile than TITANIUM TRANSPORTGROUP. It trades about -0.08 of its total potential returns per unit of risk. TITANIUM TRANSPORTGROUP is currently generating about 0.06 per unit of volatility. If you would invest  142.00  in TITANIUM TRANSPORTGROUP on September 2, 2024 and sell it today you would earn a total of  12.00  from holding TITANIUM TRANSPORTGROUP or generate 8.45% return on investment over 90 days.

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

Silicon Motion Technology  vs.  TITANIUM TRANSPORTGROUP

Silicon Motion Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silicon Motion Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TITANIUM TRANSPORTGROUP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TITANIUM TRANSPORTGROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TITANIUM TRANSPORTGROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Silicon Motion and TITANIUM TRANSPORTGROUP

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

The idea behind Silicon Motion Technology and TITANIUM TRANSPORTGROUP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.