Correlation Between SentinelOne and Silicon Motion

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

By analyzing existing cross correlation between SentinelOne and Silicon Motion Technology, you can compare the effects of market volatilities on SentinelOne and Silicon Motion 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 SentinelOne with a short position of Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and Silicon Motion.

Diversification Opportunities for SentinelOne and Silicon Motion

-0.35

Correlation Coefficient

SentinelOne  Silicon Motion

Very good diversification

The 3 months correlation between SentinelOne and Silicon is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology and SentinelOne 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 SentinelOne are associated (or correlated) with Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of SentinelOne i.e., SentinelOne and Silicon Motion go up and down completely randomly.

Pair Corralation between SentinelOne and Silicon Motion

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Silicon Motion. In addition to that, SentinelOne is 1.29 times more volatile than Silicon Motion Technology. It trades about 0.0 of its total potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.31 per unit of volatility. If you would invest  5,221  in Silicon Motion Technology on May 3, 2025 and sell it today you would earn a total of  2,433  from holding Silicon Motion Technology or generate 46.6% return on investment over 90 days.

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

SentinelOne  vs.  Silicon Motion Technology

SentinelOne

Risk-Adjusted Performance

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SentinelOne is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Silicon Motion Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Motion Technology are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Silicon Motion displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and Silicon Motion

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

The idea behind SentinelOne and Silicon Motion Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.