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 INTL and Magnachip Semiconductor, 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
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAIRY and Magnachip is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Magnachip Semiconductor 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 INTL 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 is expected to generate 3.05 times less return on investment than Magnachip Semiconductor. But when comparing it to its historical volatility, DAIRY FARM INTL is 2.23 times less risky than Magnachip Semiconductor. It trades about 0.05 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 378.00 in Magnachip Semiconductor on October 14, 2024 and sell it today you would earn a total of 10.00 from holding Magnachip Semiconductor or generate 2.65% 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 INTL vs. Magnachip Semiconductor
Performance |
| Timeline |
| DAIRY FARM INTL |
| 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. Seven West Media | DAIRY FARM vs. Darden Restaurants | DAIRY FARM vs. ETFS Coffee ETC | DAIRY FARM vs. Media and Games |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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