Correlation Between AOYAMA TRADING and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING 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 AOYAMA TRADING and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and Magnachip Semiconductor, you can compare the effects of market volatilities on AOYAMA TRADING 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 AOYAMA TRADING with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and Magnachip Semiconductor.
Diversification Opportunities for AOYAMA TRADING and Magnachip Semiconductor
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AOYAMA and Magnachip is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING i.e., AOYAMA TRADING and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and Magnachip Semiconductor
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 1.83 times more return on investment than Magnachip Semiconductor. However, AOYAMA TRADING is 1.83 times more volatile than Magnachip Semiconductor. It trades about 0.38 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.03 per unit of risk. If you would invest 785.00 in AOYAMA TRADING on August 31, 2024 and sell it today you would earn a total of 615.00 from holding AOYAMA TRADING or generate 78.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AOYAMA TRADING vs. Magnachip Semiconductor
Performance |
| Timeline |
| AOYAMA TRADING |
| Magnachip Semiconductor |
AOYAMA TRADING and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOYAMA TRADING and Magnachip Semiconductor
The main advantage of trading using opposite AOYAMA TRADING and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING 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.| AOYAMA TRADING vs. FAST RETAIL ADR | AOYAMA TRADING vs. Global Fashion Group | AOYAMA TRADING vs. Superior Plus Corp | AOYAMA TRADING vs. NMI Holdings |
| Magnachip Semiconductor vs. NVIDIA | Magnachip Semiconductor vs. Taiwan Semiconductor Manufacturing | Magnachip Semiconductor vs. Intel |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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