Correlation Between Dairy Farm and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and MagnaChip Semiconductor.
Diversification Opportunities for Dairy Farm and MagnaChip Semiconductor
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and MagnaChip is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Dairy Farm and MagnaChip Semiconductor
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 0.37 times more return on investment than MagnaChip Semiconductor. However, Dairy Farm International is 2.71 times less risky than MagnaChip Semiconductor. It trades about 0.36 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.08 per unit of risk. If you would invest 206.00 in Dairy Farm International on August 28, 2024 and sell it today you would earn a total of 28.00 from holding Dairy Farm International or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| Dairy Farm International |
| MagnaChip Semiconductor |
Dairy Farm and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and MagnaChip Semiconductor
The main advantage of trading using opposite Dairy Farm and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm vs. Origin Agritech | Dairy Farm vs. SIVERS SEMICONDUCTORS AB |
| MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc |
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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