Correlation Between Aehr Test and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Aehr Test 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 Aehr Test and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aehr Test Systems and MagnaChip Semiconductor, you can compare the effects of market volatilities on Aehr Test 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 Aehr Test with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aehr Test and MagnaChip Semiconductor.
Diversification Opportunities for Aehr Test and MagnaChip Semiconductor
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aehr and MagnaChip is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Aehr Test 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 Aehr Test Systems 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 Aehr Test i.e., Aehr Test and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Aehr Test and MagnaChip Semiconductor
Given the investment horizon of 90 days Aehr Test Systems is expected to under-perform the MagnaChip Semiconductor. In addition to that, Aehr Test is 1.09 times more volatile than MagnaChip Semiconductor. It trades about -0.21 of its total potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.04 per unit of volatility. If you would invest 448.00 in MagnaChip Semiconductor on August 31, 2024 and sell it today you would lose (23.00) from holding MagnaChip Semiconductor or give up 5.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aehr Test Systems vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Aehr Test Systems |
| MagnaChip Semiconductor |
Aehr Test and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aehr Test and MagnaChip Semiconductor
The main advantage of trading using opposite Aehr Test and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test 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.| Aehr Test vs. Photronics | Aehr Test vs. Lam Research Corp | Aehr Test vs. KLA Tencor | Aehr Test vs. Kulicke and Soffa |
| MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear | MagnaChip Semiconductor vs. nLIGHT Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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