Correlation Between Eastman Chemical and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Magnachip Semiconductor, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Magnachip Semiconductor.
Diversification Opportunities for Eastman Chemical and Magnachip Semiconductor
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and Magnachip is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Eastman Chemical and Magnachip Semiconductor
Assuming the 90 days horizon Eastman Chemical is expected to generate 0.44 times more return on investment than Magnachip Semiconductor. However, Eastman Chemical is 2.27 times less risky than Magnachip Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.02 per unit of risk. If you would invest 9,700 in Eastman Chemical on August 30, 2024 and sell it today you would earn a total of 370.00 from holding Eastman Chemical or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Magnachip Semiconductor
Performance |
| Timeline |
| Eastman Chemical |
| Magnachip Semiconductor |
Eastman Chemical and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Magnachip Semiconductor
The main advantage of trading using opposite Eastman Chemical and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. COPLAND ROAD CAPITAL | Eastman Chemical vs. Transport International Holdings | Eastman Chemical vs. Liberty Broadband | Eastman Chemical vs. GRIFFIN MINING LTD |
| Magnachip Semiconductor vs. AECOM TECHNOLOGY | Magnachip Semiconductor vs. SCOTT TECHNOLOGY | Magnachip Semiconductor vs. PKSHA TECHNOLOGY INC | Magnachip Semiconductor vs. SEI INVESTMENTS |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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