Correlation Between BE Semiconductor and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor 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 BE Semiconductor and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on BE Semiconductor 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 BE Semiconductor with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and MagnaChip Semiconductor.
Diversification Opportunities for BE Semiconductor and MagnaChip Semiconductor
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between BSI and MagnaChip is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and BE Semiconductor 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 BE Semiconductor Industries 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 BE Semiconductor i.e., BE Semiconductor and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between BE Semiconductor and MagnaChip Semiconductor
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.14 times more return on investment than MagnaChip Semiconductor. However, BE Semiconductor is 1.14 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.17 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about 0.15 per unit of risk. If you would invest 13,440 in BE Semiconductor Industries on October 24, 2024 and sell it today you would earn a total of 1,125 from holding BE Semiconductor Industries or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| BE Semiconductor Ind |
| MagnaChip Semiconductor |
BE Semiconductor and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and MagnaChip Semiconductor
The main advantage of trading using opposite BE Semiconductor and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor 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.| BE Semiconductor vs. T Mobile | BE Semiconductor vs. Mobilezone Holding AG | BE Semiconductor vs. MOBILE FACTORY INC | BE Semiconductor vs. Kingdee International Software |
| MagnaChip Semiconductor vs. Jacquet Metal Service | MagnaChip Semiconductor vs. Forsys Metals Corp | MagnaChip Semiconductor vs. MCEWEN MINING INC | MagnaChip Semiconductor vs. ADRIATIC METALS LS 013355 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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