Correlation Between Silicon Motion and Silicon Laboratories

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

Diversification Opportunities for Silicon Motion and Silicon Laboratories

0.29

Correlation Coefficient

Silicon Motion  Silicon Laboratories

Modest diversification

The 3 months correlation between Silicon and Silicon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of Silicon Motion i.e., Silicon Motion and Silicon Laboratories go up and down completely randomly.

Pair Corralation between Silicon Motion and Silicon Laboratories

Given the investment horizon of 90 days Silicon Motion Technology is expected to generate 1.32 times more return on investment than Silicon Laboratories. However, Silicon Motion is 1.32 times more volatile than Silicon Laboratories. It trades about 0.05 of its potential returns per unit of risk. Silicon Laboratories is currently generating about -0.09 per unit of risk. If you would invest  7,854  in Silicon Motion Technology on August 26, 2025 and sell it today you would earn a total of  530.00  from holding Silicon Motion Technology or generate 6.75% 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.  Silicon Laboratories

Silicon Motion Technology

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Motion Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Silicon Motion may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Silicon Laboratories

Risk-Adjusted Performance

Weakest

Over the last 90 days Silicon Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Silicon Motion and Silicon Laboratories

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

The idea behind Silicon Motion Technology and Silicon Laboratories 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.