Correlation Between SBM OFFSHORE and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE 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 SBM OFFSHORE and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Magnachip Semiconductor, you can compare the effects of market volatilities on SBM OFFSHORE 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 SBM OFFSHORE with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Magnachip Semiconductor.
Diversification Opportunities for SBM OFFSHORE and Magnachip Semiconductor
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Magnachip is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE i.e., SBM OFFSHORE and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Magnachip Semiconductor
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.84 times more return on investment than Magnachip Semiconductor. However, SBM OFFSHORE is 1.2 times less risky than Magnachip Semiconductor. It trades about 0.18 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about 0.0 per unit of risk. If you would invest 1,675 in SBM OFFSHORE on November 1, 2024 and sell it today you would earn a total of 103.00 from holding SBM OFFSHORE or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Magnachip Semiconductor
Performance |
| Timeline |
| SBM OFFSHORE |
| Magnachip Semiconductor |
SBM OFFSHORE and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Magnachip Semiconductor
The main advantage of trading using opposite SBM OFFSHORE and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE 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.| SBM OFFSHORE vs. Sunstone Hotel Investors | SBM OFFSHORE vs. VULCAN MATERIALS | SBM OFFSHORE vs. Eagle Materials | SBM OFFSHORE vs. INTERCONT HOTELS |
| Magnachip Semiconductor vs. USU Software AG | Magnachip Semiconductor vs. Marie Brizard Wine | Magnachip Semiconductor vs. JAPAN TOBACCO UNSPADR12 | Magnachip Semiconductor vs. NORTHEAST UTILITIES |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |