Correlation Between KRISPY KREME and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both KRISPY KREME 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 KRISPY KREME and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KRISPY KREME DL 01 and Magnachip Semiconductor, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Magnachip Semiconductor.
Diversification Opportunities for KRISPY KREME and Magnachip Semiconductor
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KRISPY and Magnachip is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between KRISPY KREME and Magnachip Semiconductor
Assuming the 90 days horizon KRISPY KREME is expected to generate 13.02 times less return on investment than Magnachip Semiconductor. In addition to that, KRISPY KREME is 1.21 times more volatile than Magnachip Semiconductor. It trades about 0.02 of its total potential returns per unit of risk. Magnachip Semiconductor is currently generating about 0.26 per unit of volatility. If you would invest 332.00 in Magnachip Semiconductor on September 2, 2024 and sell it today you would earn a total of 54.00 from holding Magnachip Semiconductor or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KRISPY KREME DL 01 vs. Magnachip Semiconductor
Performance |
| Timeline |
| KRISPY KREME DL |
| Magnachip Semiconductor |
KRISPY KREME and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRISPY KREME and Magnachip Semiconductor
The main advantage of trading using opposite KRISPY KREME and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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.| KRISPY KREME vs. BOS BETTER ONLINE | KRISPY KREME vs. GungHo Online Entertainment | KRISPY KREME vs. CARSALESCOM | KRISPY KREME vs. Carsales |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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