Correlation Between Applied Materials and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and MagnaChip Semiconductor.
Diversification Opportunities for Applied Materials and MagnaChip Semiconductor
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and MagnaChip is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Applied Materials and MagnaChip Semiconductor
Assuming the 90 days horizon Applied Materials is expected to generate 1.0 times more return on investment than MagnaChip Semiconductor. However, Applied Materials is 1.0 times less risky than MagnaChip Semiconductor. It trades about 0.05 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.05 per unit of risk. If you would invest 10,596 in Applied Materials on September 3, 2024 and sell it today you would earn a total of 6,282 from holding Applied Materials or generate 59.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| Applied Materials |
| MagnaChip Semiconductor |
Applied Materials and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and MagnaChip Semiconductor
The main advantage of trading using opposite Applied Materials and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. ASML HOLDING NY | Applied Materials vs. ASML Holding NV | Applied Materials vs. ASML Holding NV | Applied Materials vs. Lam Research |
| MagnaChip Semiconductor vs. Air Lease | MagnaChip Semiconductor vs. Global Ship Lease | MagnaChip Semiconductor vs. Titan Machinery | MagnaChip Semiconductor vs. GREENX METALS LTD |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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