Correlation Between BROADWIND ENRGY and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both BROADWIND ENRGY 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 BROADWIND ENRGY and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROADWIND ENRGY and Magnachip Semiconductor, you can compare the effects of market volatilities on BROADWIND ENRGY 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 BROADWIND ENRGY with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADWIND ENRGY and Magnachip Semiconductor.
Diversification Opportunities for BROADWIND ENRGY and Magnachip Semiconductor
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BROADWIND and Magnachip is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BROADWIND ENRGY and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and BROADWIND ENRGY 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 BROADWIND ENRGY 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 BROADWIND ENRGY i.e., BROADWIND ENRGY and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between BROADWIND ENRGY and Magnachip Semiconductor
Assuming the 90 days trading horizon BROADWIND ENRGY is expected to generate 1.04 times less return on investment than Magnachip Semiconductor. In addition to that, BROADWIND ENRGY is 1.35 times more volatile than Magnachip Semiconductor. It trades about 0.12 of its total potential returns per unit of risk. Magnachip Semiconductor is currently generating about 0.16 per unit of volatility. If you would invest 348.00 in Magnachip Semiconductor on September 14, 2024 and sell it today you would earn a total of 40.00 from holding Magnachip Semiconductor or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BROADWIND ENRGY vs. Magnachip Semiconductor
Performance |
| Timeline |
| BROADWIND ENRGY |
| Magnachip Semiconductor |
BROADWIND ENRGY and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BROADWIND ENRGY and Magnachip Semiconductor
The main advantage of trading using opposite BROADWIND ENRGY and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROADWIND ENRGY 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.| BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc |
| Magnachip Semiconductor vs. LION ONE METALS | Magnachip Semiconductor vs. EMBARK EDUCATION LTD | Magnachip Semiconductor vs. Grand Canyon Education | Magnachip Semiconductor vs. Perdoceo Education |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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