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 Corp, 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
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and MagnaChip is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and MagnaChip Semiconductor Corp 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 Boston Beer is expected to generate 1.26 times less return on investment than MagnaChip Semiconductor. But when comparing it to its historical volatility, The Boston Beer is 2.07 times less risky than MagnaChip Semiconductor. It trades about 0.31 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 356.00 in MagnaChip Semiconductor Corp on September 2, 2024 and sell it today you would earn a total of 42.00 from holding MagnaChip Semiconductor Corp or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. MagnaChip Semiconductor Corp
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. Heineken Holding NV | Boston Beer vs. Superior Plus Corp | Boston Beer vs. NMI Holdings | Boston Beer vs. Origin Agritech |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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