Correlation Between EIDESVIK OFFSHORE and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and MagnaChip Semiconductor.
Diversification Opportunities for EIDESVIK OFFSHORE and MagnaChip Semiconductor
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EIDESVIK and MagnaChip is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and MagnaChip Semiconductor
Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 1.3 times more return on investment than MagnaChip Semiconductor. However, EIDESVIK OFFSHORE is 1.3 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.05 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.05 per unit of risk. If you would invest 65.00 in EIDESVIK OFFSHORE NK on September 12, 2024 and sell it today you would earn a total of 45.00 from holding EIDESVIK OFFSHORE NK or generate 69.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| MagnaChip Semiconductor |
EIDESVIK OFFSHORE and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and MagnaChip Semiconductor
The main advantage of trading using opposite EIDESVIK OFFSHORE and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE 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.| EIDESVIK OFFSHORE vs. TAL Education Group | EIDESVIK OFFSHORE vs. PLAYTIKA HOLDING DL 01 | EIDESVIK OFFSHORE vs. GigaMedia | EIDESVIK OFFSHORE vs. DeVry Education Group |
| 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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