Correlation Between Silicon Motion and Himax Technologies

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

Diversification Opportunities for Silicon Motion and Himax Technologies

0.95

Correlation Coefficient

Silicon Motion  Himax Technologies

Almost no diversification

The 3 months correlation between Silicon and Himax is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Himax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himax Technologies 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 Himax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himax Technologies has no effect on the direction of Silicon Motion i.e., Silicon Motion and Himax Technologies go up and down completely randomly.

Pair Corralation between Silicon Motion and Himax Technologies

Given the investment horizon of 90 days Silicon Motion Technology is expected to generate 0.92 times more return on investment than Himax Technologies. However, Silicon Motion Technology is 1.09 times less risky than Himax Technologies. It trades about 0.33 of its potential returns per unit of risk. Himax Technologies is currently generating about 0.21 per unit of risk. If you would invest  4,986  in Silicon Motion Technology on May 1, 2025 and sell it today you would earn a total of  2,710  from holding Silicon Motion Technology or generate 54.35% return on investment over 90 days.

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

Silicon Motion Technology  vs.  Himax Technologies

Silicon Motion Technology

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Motion Technology are ranked lower than 25 (%) 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.

Himax Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Himax Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Himax Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicon Motion and Himax Technologies

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

The idea behind Silicon Motion Technology and Himax 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.