Correlation Between DXC Technology and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both DXC 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 DXC 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 DXC Technology Co and Magnachip Semiconductor, you can compare the effects of market volatilities on DXC 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 DXC Technology with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Magnachip Semiconductor.
Diversification Opportunities for DXC Technology and Magnachip Semiconductor
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DXC and Magnachip is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and DXC 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 DXC Technology Co 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 DXC Technology i.e., DXC Technology and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between DXC Technology and Magnachip Semiconductor
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 1.1 times more return on investment than Magnachip Semiconductor. However, DXC Technology is 1.1 times more volatile than Magnachip Semiconductor. It trades about 0.0 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.06 per unit of risk. If you would invest 2,516 in DXC Technology Co on September 12, 2024 and sell it today you would lose (459.00) from holding DXC Technology Co or give up 18.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. Magnachip Semiconductor
Performance |
| Timeline |
| DXC Technology |
| Magnachip Semiconductor |
DXC Technology and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Magnachip Semiconductor
The main advantage of trading using opposite DXC Technology and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC 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.| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
| Magnachip Semiconductor vs. Check Point Software | Magnachip Semiconductor vs. Wayside Technology Group | Magnachip Semiconductor vs. Computer And Technologies | Magnachip Semiconductor vs. DXC Technology Co |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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