Correlation Between Kulicke and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Kulicke 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 Kulicke and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kulicke and Soffa and MagnaChip Semiconductor, you can compare the effects of market volatilities on Kulicke 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 Kulicke with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kulicke and MagnaChip Semiconductor.
Diversification Opportunities for Kulicke and MagnaChip Semiconductor
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kulicke and MagnaChip is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Kulicke 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 Kulicke and Soffa 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 Kulicke i.e., Kulicke and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Kulicke and MagnaChip Semiconductor
Given the investment horizon of 90 days Kulicke and Soffa is expected to generate 0.56 times more return on investment than MagnaChip Semiconductor. However, Kulicke and Soffa is 1.79 times less risky than MagnaChip Semiconductor. It trades about 0.15 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.2 per unit of risk. If you would invest 4,613 in Kulicke and Soffa on August 27, 2024 and sell it today you would earn a total of 304.00 from holding Kulicke and Soffa or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kulicke and Soffa vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Kulicke and Soffa |
| MagnaChip Semiconductor |
Kulicke and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kulicke and MagnaChip Semiconductor
The main advantage of trading using opposite Kulicke and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kulicke 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.The idea behind Kulicke and Soffa and MagnaChip Semiconductor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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