Correlation Between Silicom and Akoustis Technologies

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

By analyzing existing cross correlation between Silicom and Akoustis Technologies, you can compare the effects of market volatilities on Silicom and Akoustis Technologies 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 Akoustis Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicom and Akoustis Technologies.

Diversification Opportunities for Silicom and Akoustis Technologies

0.05

Correlation Coefficient

Silicom  Akoustis Technologies

Significant diversification

The 3 months correlation between Silicom and Akoustis is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Silicom and Akoustis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akoustis Technologies 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 Akoustis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akoustis Technologies has no effect on the direction of Silicom i.e., Silicom and Akoustis Technologies go up and down completely randomly.

Pair Corralation between Silicom and Akoustis Technologies

Given the investment horizon of 90 days Silicom is expected to generate 43.97 times less return on investment than Akoustis Technologies. But when comparing it to its historical volatility, Silicom is 3.37 times less risky than Akoustis Technologies. It trades about 0.01 of its potential returns per unit of risk. Akoustis Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8.45  in Akoustis Technologies on September 3, 2024 and sell it today you would earn a total of  1.55  from holding Akoustis Technologies or generate 18.34% return on investment over 90 days.

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

Silicom  vs.  Akoustis Technologies

Silicom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silicom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Silicom is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Akoustis Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Akoustis Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Akoustis Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicom and Akoustis Technologies

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

The idea behind Silicom and Akoustis Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.