Correlation Between BRIT AMER and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both BRIT AMER 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 BRIT AMER and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on BRIT AMER 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 BRIT AMER with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and MagnaChip Semiconductor.
Diversification Opportunities for BRIT AMER and MagnaChip Semiconductor
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BRIT and MagnaChip is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and BRIT AMER 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 BRIT AMER TOBACCO 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 BRIT AMER i.e., BRIT AMER and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between BRIT AMER and MagnaChip Semiconductor
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.46 times more return on investment than MagnaChip Semiconductor. However, BRIT AMER TOBACCO is 2.18 times less risky than MagnaChip Semiconductor. It trades about 0.02 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.06 per unit of risk. If you would invest 3,249 in BRIT AMER TOBACCO on September 23, 2024 and sell it today you would earn a total of 233.00 from holding BRIT AMER TOBACCO or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| MagnaChip Semiconductor |
BRIT AMER and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and MagnaChip Semiconductor
The main advantage of trading using opposite BRIT AMER and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER 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.| BRIT AMER vs. CARSALESCOM | BRIT AMER vs. The Trade Desk | BRIT AMER vs. FAST RETAIL ADR | BRIT AMER vs. Tradeweb Markets |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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