Correlation Between CN MODERN and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Magnachip Semiconductor 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 CN MODERN and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Magnachip Semiconductor, you can compare the effects of market volatilities on CN MODERN and Magnachip Semiconductor 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 CN MODERN with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Magnachip Semiconductor.
Diversification Opportunities for CN MODERN and Magnachip Semiconductor
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between 07M and Magnachip is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Magnachip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnachip Semiconductor has no effect on the direction of CN MODERN i.e., CN MODERN and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between CN MODERN and Magnachip Semiconductor
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 0.95 times more return on investment than Magnachip Semiconductor. However, CN MODERN DAIRY is 1.05 times less risky than Magnachip Semiconductor. It trades about 0.04 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.06 per unit of risk. If you would invest 7.97 in CN MODERN DAIRY on September 2, 2024 and sell it today you would earn a total of 1.28 from holding CN MODERN DAIRY or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Magnachip Semiconductor
Performance |
| Timeline |
| CN MODERN DAIRY |
| Magnachip Semiconductor |
CN MODERN and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Magnachip Semiconductor
The main advantage of trading using opposite CN MODERN and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Magnachip Semiconductor 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 Magnachip Semiconductor will offset losses from the drop in Magnachip Semiconductor's long position.| CN MODERN vs. SIVERS SEMICONDUCTORS AB | CN MODERN vs. Darden Restaurants | CN MODERN vs. Reliance Steel Aluminum | CN MODERN vs. Q2M Managementberatung AG |
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Check out your portfolio center.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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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