Correlation Between InPlay Oil and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Magnachip Semiconductor, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Magnachip Semiconductor.
Diversification Opportunities for InPlay Oil and Magnachip Semiconductor
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InPlay and Magnachip is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between InPlay Oil and Magnachip Semiconductor
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.81 times more return on investment than Magnachip Semiconductor. However, InPlay Oil Corp is 1.24 times less risky than Magnachip Semiconductor. It trades about -0.03 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.05 per unit of risk. If you would invest 159.00 in InPlay Oil Corp on September 12, 2024 and sell it today you would lose (48.00) from holding InPlay Oil Corp or give up 30.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Magnachip Semiconductor
Performance |
| Timeline |
| InPlay Oil Corp |
| Magnachip Semiconductor |
InPlay Oil and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Magnachip Semiconductor
The main advantage of trading using opposite InPlay Oil and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.The idea behind InPlay Oil Corp and Magnachip Semiconductor 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.| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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