Correlation Between FAST RETAIL and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL 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 RETAIL 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 RETAIL ADR and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on FAST RETAIL 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 RETAIL with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and MagnaChip Semiconductor.
Diversification Opportunities for FAST RETAIL and MagnaChip Semiconductor
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FAST and MagnaChip is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR 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 RETAIL 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 RETAIL ADR 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 RETAIL i.e., FAST RETAIL and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between FAST RETAIL and MagnaChip Semiconductor
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.8 times more return on investment than MagnaChip Semiconductor. However, FAST RETAIL ADR is 1.26 times less risky than MagnaChip Semiconductor. It trades about 0.07 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 1,830 in FAST RETAIL ADR on September 21, 2024 and sell it today you would earn a total of 1,370 from holding FAST RETAIL ADR or generate 74.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| FAST RETAIL ADR |
| MagnaChip Semiconductor |
FAST RETAIL and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and MagnaChip Semiconductor
The main advantage of trading using opposite FAST RETAIL and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL 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 RETAIL vs. CCC SA | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB | FAST RETAIL vs. Norsk Hydro ASA |
| MagnaChip Semiconductor vs. FAST RETAIL ADR | MagnaChip Semiconductor vs. NXP Semiconductors NV | MagnaChip Semiconductor vs. Nordic Semiconductor ASA | MagnaChip Semiconductor vs. Carsales |
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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