Correlation Between HomeToGo and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both HomeToGo 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 HomeToGo and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and Magnachip Semiconductor, you can compare the effects of market volatilities on HomeToGo 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 HomeToGo with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and Magnachip Semiconductor.
Diversification Opportunities for HomeToGo and Magnachip Semiconductor
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HomeToGo and Magnachip is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and HomeToGo 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 HomeToGo SE 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 HomeToGo i.e., HomeToGo and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between HomeToGo and Magnachip Semiconductor
Assuming the 90 days trading horizon HomeToGo SE is expected to generate 0.72 times more return on investment than Magnachip Semiconductor. However, HomeToGo SE is 1.39 times less risky than Magnachip Semiconductor. It trades about -0.21 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.26 per unit of risk. If you would invest 237.00 in HomeToGo SE on August 25, 2024 and sell it today you would lose (31.00) from holding HomeToGo SE or give up 13.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. Magnachip Semiconductor
Performance |
| Timeline |
| HomeToGo SE |
| Magnachip Semiconductor |
HomeToGo and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and Magnachip Semiconductor
The main advantage of trading using opposite HomeToGo and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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.| HomeToGo vs. ANTA SPORTS PRODUCT | HomeToGo vs. Universal Entertainment | HomeToGo vs. RCS MediaGroup SpA | HomeToGo vs. UNIVERSAL MUSIC GROUP |
| Magnachip Semiconductor vs. THORNEY TECHS LTD | Magnachip Semiconductor vs. ASPEN TECHINC DL | Magnachip Semiconductor vs. Uber Technologies | Magnachip Semiconductor vs. AAC TECHNOLOGHLDGADR |
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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