Correlation Between Strategic Investments and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Strategic Investments 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 Strategic Investments and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Investments AS and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Strategic Investments 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 Strategic Investments with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and MagnaChip Semiconductor.
Diversification Opportunities for Strategic Investments and MagnaChip Semiconductor
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Strategic and MagnaChip is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Strategic Investments 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 Strategic Investments AS 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 Strategic Investments i.e., Strategic Investments and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Strategic Investments and MagnaChip Semiconductor
Assuming the 90 days horizon Strategic Investments is expected to generate 1.18 times less return on investment than MagnaChip Semiconductor. In addition to that, Strategic Investments is 3.39 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.03 of its total potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about 0.11 per unit of volatility. If you would invest 392.00 in MagnaChip Semiconductor Corp on November 30, 2024 and sell it today you would earn a total of 48.00 from holding MagnaChip Semiconductor Corp or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Investments AS vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| Strategic Investments |
| MagnaChip Semiconductor |
Strategic Investments and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Investments and MagnaChip Semiconductor
The main advantage of trading using opposite Strategic Investments and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments 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.| Strategic Investments vs. FAST RETAIL ADR | Strategic Investments vs. CyberArk Software | Strategic Investments vs. GOME Retail Holdings | Strategic Investments vs. COSTCO WHOLESALE CDR |
| MagnaChip Semiconductor vs. CARSALESCOM | MagnaChip Semiconductor vs. Motorcar Parts of | MagnaChip Semiconductor vs. Alfa Financial Software | MagnaChip Semiconductor vs. COMMERCIAL VEHICLE |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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