Correlation Between ELMOS SEMICONDUCTOR and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and MagnaChip Semiconductor.
Diversification Opportunities for ELMOS SEMICONDUCTOR and MagnaChip Semiconductor
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between ELMOS and MagnaChip is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between ELMOS SEMICONDUCTOR and MagnaChip Semiconductor
Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 2.09 times more return on investment than MagnaChip Semiconductor. However, ELMOS SEMICONDUCTOR is 2.09 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.09 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 6,770 in ELMOS SEMICONDUCTOR on November 1, 2024 and sell it today you would earn a total of 390.00 from holding ELMOS SEMICONDUCTOR or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELMOS SEMICONDUCTOR vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| ELMOS SEMICONDUCTOR |
| MagnaChip Semiconductor |
ELMOS SEMICONDUCTOR and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELMOS SEMICONDUCTOR and MagnaChip Semiconductor
The main advantage of trading using opposite ELMOS SEMICONDUCTOR and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR 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.| ELMOS SEMICONDUCTOR vs. Cleanaway Waste Management | ELMOS SEMICONDUCTOR vs. FORMPIPE SOFTWARE AB | ELMOS SEMICONDUCTOR vs. Infrastrutture Wireless Italiane | ELMOS SEMICONDUCTOR vs. Guidewire Software |
| MagnaChip Semiconductor vs. Norwegian Air Shuttle | MagnaChip Semiconductor vs. SEALED AIR | MagnaChip Semiconductor vs. NH HOTEL GROUP | MagnaChip Semiconductor vs. Choice Hotels International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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