Correlation Between Fast Retailing and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and MagnaChip Semiconductor.
Diversification Opportunities for Fast Retailing and MagnaChip Semiconductor
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fast and MagnaChip is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Fast Retailing and MagnaChip Semiconductor
Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the MagnaChip Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 1.22 times less risky than MagnaChip Semiconductor. The stock trades about -0.14 of its potential returns per unit of risk. The MagnaChip Semiconductor Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 378.00 in MagnaChip Semiconductor Corp on October 16, 2024 and sell it today you would earn a total of 2.00 from holding MagnaChip Semiconductor Corp or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Fast Retailing Co vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| Fast Retailing |
| MagnaChip Semiconductor |
Fast Retailing and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and MagnaChip Semiconductor
The main advantage of trading using opposite Fast Retailing and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.| Fast Retailing vs. NURAN WIRELESS INC | Fast Retailing vs. Tower One Wireless | Fast Retailing vs. Ryanair Holdings plc | Fast Retailing vs. Air New Zealand |
| MagnaChip Semiconductor vs. JLF INVESTMENT | MagnaChip Semiconductor vs. Kingdee International Software | MagnaChip Semiconductor vs. CyberArk Software | MagnaChip Semiconductor vs. ECHO INVESTMENT ZY |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |