Correlation Between Alfa Financial and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and Magnachip Semiconductor, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Magnachip Semiconductor.
Diversification Opportunities for Alfa Financial and Magnachip Semiconductor
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alfa and Magnachip is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Alfa Financial and Magnachip Semiconductor
Assuming the 90 days trading horizon Alfa Financial Software is expected to under-perform the Magnachip Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Financial Software is 1.66 times less risky than Magnachip Semiconductor. The stock trades about -0.15 of its potential returns per unit of risk. The Magnachip Semiconductor is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 386.00 in Magnachip Semiconductor on October 30, 2024 and sell it today you would lose (6.00) from holding Magnachip Semiconductor or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Magnachip Semiconductor
Performance |
| Timeline |
| Alfa Financial Software |
| Magnachip Semiconductor |
Alfa Financial and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Magnachip Semiconductor
The main advantage of trading using opposite Alfa Financial and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
| Magnachip Semiconductor vs. KENEDIX OFFICE INV | Magnachip Semiconductor vs. Neinor Homes SA | Magnachip Semiconductor vs. Taylor Morrison Home | Magnachip Semiconductor vs. INTER CARS SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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