Correlation Between Advanced Micro and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Magnachip Semiconductor, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Magnachip Semiconductor.
Diversification Opportunities for Advanced Micro and Magnachip Semiconductor
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Magnachip is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Advanced Micro and Magnachip Semiconductor
Assuming the 90 days trading horizon Advanced Micro Devices is expected to generate 0.61 times more return on investment than Magnachip Semiconductor. However, Advanced Micro Devices is 1.64 times less risky than Magnachip Semiconductor. It trades about -0.19 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.13 per unit of risk. If you would invest 14,692 in Advanced Micro Devices on August 29, 2024 and sell it today you would lose (1,612) from holding Advanced Micro Devices or give up 10.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. Magnachip Semiconductor
Performance |
| Timeline |
| Advanced Micro Devices |
| Magnachip Semiconductor |
Advanced Micro and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Magnachip Semiconductor
The main advantage of trading using opposite Advanced Micro and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. NVIDIA | Advanced Micro vs. NVIDIA | Advanced Micro vs. QUALCOMM Incorporated | Advanced Micro vs. Intel |
| Magnachip Semiconductor vs. New Residential Investment | Magnachip Semiconductor vs. CDL INVESTMENT | Magnachip Semiconductor vs. Jacquet Metal Service | Magnachip Semiconductor vs. DIVERSIFIED ROYALTY |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |