Correlation Between Altair Engineering and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Altair Engineering 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 Altair Engineering and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Altair Engineering 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 Altair Engineering with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and MagnaChip Semiconductor.
Diversification Opportunities for Altair Engineering and MagnaChip Semiconductor
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Altair and MagnaChip is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Altair Engineering 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 Altair Engineering 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 Altair Engineering i.e., Altair Engineering and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Altair Engineering and MagnaChip Semiconductor
Assuming the 90 days horizon Altair Engineering is expected to generate 0.81 times more return on investment than MagnaChip Semiconductor. However, Altair Engineering is 1.24 times less risky than MagnaChip Semiconductor. It trades about 0.08 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.06 per unit of risk. If you would invest 6,700 in Altair Engineering on September 14, 2024 and sell it today you would earn a total of 3,300 from holding Altair Engineering or generate 49.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair Engineering vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| Altair Engineering |
| MagnaChip Semiconductor |
Altair Engineering and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and MagnaChip Semiconductor
The main advantage of trading using opposite Altair Engineering and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering 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.| Altair Engineering vs. Adyen NV | Altair Engineering vs. Superior Plus Corp | Altair Engineering vs. SIVERS SEMICONDUCTORS AB | Altair Engineering vs. Norsk Hydro ASA |
| MagnaChip Semiconductor vs. QUEEN S ROAD | MagnaChip Semiconductor vs. Nordic Semiconductor ASA | MagnaChip Semiconductor vs. ELMOS SEMICONDUCTOR | MagnaChip Semiconductor vs. BII Railway Transportation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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