Correlation Between TOREX SEMICONDUCTOR and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both TOREX SEMICONDUCTOR and MGIC INVESTMENT 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 TOREX SEMICONDUCTOR and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOREX SEMICONDUCTOR LTD and MGIC INVESTMENT, you can compare the effects of market volatilities on TOREX SEMICONDUCTOR and MGIC INVESTMENT 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 TOREX SEMICONDUCTOR with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOREX SEMICONDUCTOR and MGIC INVESTMENT.
Diversification Opportunities for TOREX SEMICONDUCTOR and MGIC INVESTMENT
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TOREX and MGIC is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR LTD are associated (or correlated) with MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between TOREX SEMICONDUCTOR and MGIC INVESTMENT
Assuming the 90 days horizon TOREX SEMICONDUCTOR LTD is expected to under-perform the MGIC INVESTMENT. In addition to that, TOREX SEMICONDUCTOR is 1.07 times more volatile than MGIC INVESTMENT. It trades about -0.23 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.19 per unit of volatility. If you would invest 2,307 in MGIC INVESTMENT on September 2, 2024 and sell it today you would earn a total of 173.00 from holding MGIC INVESTMENT or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOREX SEMICONDUCTOR LTD vs. MGIC INVESTMENT
Performance |
| Timeline |
| TOREX SEMICONDUCTOR LTD |
| MGIC INVESTMENT |
TOREX SEMICONDUCTOR and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOREX SEMICONDUCTOR and MGIC INVESTMENT
The main advantage of trading using opposite TOREX SEMICONDUCTOR and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOREX SEMICONDUCTOR position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.The idea behind TOREX SEMICONDUCTOR LTD and MGIC INVESTMENT 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.| MGIC INVESTMENT vs. SIVERS SEMICONDUCTORS AB | MGIC INVESTMENT vs. Darden Restaurants | MGIC INVESTMENT vs. Reliance Steel Aluminum | MGIC INVESTMENT vs. Q2M Managementberatung AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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