Correlation Between Silicon Motion and Hitachi
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and Hitachi 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 Hitachi 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 Hitachi, you can compare the effects of market volatilities on Silicon Motion and Hitachi 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 Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Hitachi.
Diversification Opportunities for Silicon Motion and Hitachi
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Silicon and Hitachi is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi 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 Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of Silicon Motion i.e., Silicon Motion and Hitachi go up and down completely randomly.
Pair Corralation between Silicon Motion and Hitachi
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.07 times more return on investment than Hitachi. However, Silicon Motion is 1.07 times more volatile than Hitachi. It trades about 0.31 of its potential returns per unit of risk. Hitachi is currently generating about 0.08 per unit of risk. If you would invest 3,783 in Silicon Motion Technology on April 25, 2025 and sell it today you would earn a total of 2,417 from holding Silicon Motion Technology or generate 63.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Silicon Motion Technology vs. Hitachi
Performance |
Timeline |
Silicon Motion Technology |
Hitachi |
Silicon Motion and Hitachi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Silicon Motion and Hitachi
The main advantage of trading using opposite Silicon Motion and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.Silicon Motion vs. Pentair plc | Silicon Motion vs. Delta Air Lines | Silicon Motion vs. CHINA SOUTHN AIR H | Silicon Motion vs. SHELF DRILLING LTD |
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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.
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