Correlation Between Silicon Laboratories and Ambarella

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

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

Diversification Opportunities for Silicon Laboratories and Ambarella

0.15

Correlation Coefficient

Silicon Laboratories  Ambarella

Average diversification

The 3 months correlation between Silicon and Ambarella is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and Ambarella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambarella and Silicon Laboratories 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 Laboratories are associated (or correlated) with Ambarella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambarella has no effect on the direction of Silicon Laboratories i.e., Silicon Laboratories and Ambarella go up and down completely randomly.

Pair Corralation between Silicon Laboratories and Ambarella

Given the investment horizon of 90 days Silicon Laboratories is expected to generate 7.69 times less return on investment than Ambarella. But when comparing it to its historical volatility, Silicon Laboratories is 1.56 times less risky than Ambarella. It trades about 0.03 of its potential returns per unit of risk. Ambarella is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  6,374  in Ambarella on August 1, 2025 and sell it today you would earn a total of  2,094  from holding Ambarella or generate 32.85% return on investment over 90 days.

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

Silicon Laboratories  vs.  Ambarella

Silicon Laboratories

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Silicon Laboratories is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ambarella

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ambarella are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Ambarella sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicon Laboratories and Ambarella

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

The idea behind Silicon Laboratories and Ambarella 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.