Correlation Between Computer and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Computer 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 Computer and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer And Technologies and Magnachip Semiconductor, you can compare the effects of market volatilities on Computer 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 Computer with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer and Magnachip Semiconductor.
Diversification Opportunities for Computer and Magnachip Semiconductor
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Computer and Magnachip is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Computer And Technologies and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Computer 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 Computer And Technologies 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 Computer i.e., Computer and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Computer and Magnachip Semiconductor
Assuming the 90 days horizon Computer And Technologies is expected to under-perform the Magnachip Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Computer And Technologies is 1.32 times less risky than Magnachip Semiconductor. The stock trades about -0.08 of its potential returns per unit of risk. The Magnachip Semiconductor is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 346.00 in Magnachip Semiconductor on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Magnachip Semiconductor or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer And Technologies vs. Magnachip Semiconductor
Performance |
| Timeline |
| Computer And Technologies |
| Magnachip Semiconductor |
Computer and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer and Magnachip Semiconductor
The main advantage of trading using opposite Computer and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer 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.| Computer vs. Cognizant Technology Solutions | Computer vs. Superior Plus Corp | Computer vs. SIVERS SEMICONDUCTORS AB | Computer vs. Norsk Hydro ASA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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