Correlation Between MACOM Technology and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Magnachip Semiconductor, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Magnachip Semiconductor.
Diversification Opportunities for MACOM Technology and Magnachip Semiconductor
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MACOM and Magnachip is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between MACOM Technology and Magnachip Semiconductor
Assuming the 90 days horizon MACOM Technology is expected to generate 2.2 times less return on investment than Magnachip Semiconductor. But when comparing it to its historical volatility, MACOM Technology Solutions is 1.56 times less risky than Magnachip Semiconductor. It trades about 0.12 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 346.00 in Magnachip Semiconductor on September 13, 2024 and sell it today you would earn a total of 42.00 from holding Magnachip Semiconductor or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Magnachip Semiconductor
Performance |
| Timeline |
| MACOM Technology Sol |
| Magnachip Semiconductor |
MACOM Technology and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Magnachip Semiconductor
The main advantage of trading using opposite MACOM Technology and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. Taiwan Semiconductor Manufacturing | MACOM Technology vs. Broadcom | MACOM Technology vs. Superior Plus Corp | MACOM Technology vs. SIVERS SEMICONDUCTORS AB |
| Magnachip Semiconductor vs. LION ONE METALS | Magnachip Semiconductor vs. EMBARK EDUCATION LTD | Magnachip Semiconductor vs. Grand Canyon Education | Magnachip Semiconductor vs. Perdoceo Education |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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