Correlation Between Boston Beer and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and Magnachip Semiconductor, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Magnachip Semiconductor.
Diversification Opportunities for Boston Beer and Magnachip Semiconductor
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and Magnachip is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Boston Beer 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 The Boston Beer 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 Boston Beer i.e., Boston Beer and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Boston Beer and Magnachip Semiconductor
Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.89 times more return on investment than Magnachip Semiconductor. However, The Boston Beer is 1.12 times less risky than Magnachip Semiconductor. It trades about -0.02 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.06 per unit of risk. If you would invest 34,690 in The Boston Beer on October 19, 2024 and sell it today you would lose (9,930) from holding The Boston Beer or give up 28.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Magnachip Semiconductor
Performance |
| Timeline |
| Boston Beer |
| Magnachip Semiconductor |
Boston Beer and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Magnachip Semiconductor
The main advantage of trading using opposite Boston Beer and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Constellation Software | Boston Beer vs. Unity Software | Boston Beer vs. AGF Management Limited | Boston Beer vs. Axway Software SA |
| Magnachip Semiconductor vs. TELECOM ITALIA | Magnachip Semiconductor vs. Telecom Argentina SA | Magnachip Semiconductor vs. PULSION Medical Systems | Magnachip Semiconductor vs. Comba Telecom Systems |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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