Correlation Between Cal Maine and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Cal Maine 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 Cal Maine and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cal Maine Foods and Magnachip Semiconductor, you can compare the effects of market volatilities on Cal Maine 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 Cal Maine with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Magnachip Semiconductor.
Diversification Opportunities for Cal Maine and Magnachip Semiconductor
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cal and Magnachip is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Cal Maine 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 Cal Maine Foods 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 Cal Maine i.e., Cal Maine and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Cal Maine and Magnachip Semiconductor
Assuming the 90 days horizon Cal Maine Foods is expected to generate 0.81 times more return on investment than Magnachip Semiconductor. However, Cal Maine Foods is 1.24 times less risky than Magnachip Semiconductor. It trades about 0.12 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.06 per unit of risk. If you would invest 4,146 in Cal Maine Foods on September 12, 2024 and sell it today you would earn a total of 5,184 from holding Cal Maine Foods or generate 125.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. Magnachip Semiconductor
Performance |
| Timeline |
| Cal Maine Foods |
| Magnachip Semiconductor |
Cal Maine and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Magnachip Semiconductor
The main advantage of trading using opposite Cal Maine and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine 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.| Cal Maine vs. Magnachip Semiconductor | Cal Maine vs. CARSALESCOM | Cal Maine vs. SINGAPORE AIRLINES | Cal Maine vs. NXP Semiconductors NV |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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