Correlation Between Silicom and UTStarcom Holdings

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

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

Diversification Opportunities for Silicom and UTStarcom Holdings

-0.07

Correlation Coefficient

Silicom  UTStarcom Holdings

Good diversification

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

Pair Corralation between Silicom and UTStarcom Holdings

Given the investment horizon of 90 days Silicom is expected to generate 16.97 times less return on investment than UTStarcom Holdings. But when comparing it to its historical volatility, Silicom is 1.76 times less risky than UTStarcom Holdings. It trades about 0.01 of its potential returns per unit of risk. UTStarcom Holdings Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  272.00  in UTStarcom Holdings Corp on September 2, 2024 and sell it today you would earn a total of  27.00  from holding UTStarcom Holdings Corp or generate 9.93% return on investment over 90 days.

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

Silicom  vs.  UTStarcom Holdings Corp

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.

UTStarcom Holdings Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UTStarcom Holdings Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, UTStarcom Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicom and UTStarcom Holdings

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

The idea behind Silicom and UTStarcom Holdings Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.