Correlation Between KOBE STEEL and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both KOBE STEEL 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 KOBE STEEL and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KOBE STEEL LTD and Magnachip Semiconductor, you can compare the effects of market volatilities on KOBE STEEL 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 KOBE STEEL with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOBE STEEL and Magnachip Semiconductor.
Diversification Opportunities for KOBE STEEL and Magnachip Semiconductor
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KOBE and Magnachip is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KOBE STEEL LTD and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and KOBE STEEL 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 KOBE STEEL LTD 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 KOBE STEEL i.e., KOBE STEEL and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between KOBE STEEL and Magnachip Semiconductor
Assuming the 90 days trading horizon KOBE STEEL LTD is expected to generate 0.87 times more return on investment than Magnachip Semiconductor. However, KOBE STEEL LTD is 1.16 times less risky than Magnachip Semiconductor. It trades about 0.05 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.06 per unit of risk. If you would invest 615.00 in KOBE STEEL LTD on October 16, 2024 and sell it today you would earn a total of 355.00 from holding KOBE STEEL LTD or generate 57.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KOBE STEEL LTD vs. Magnachip Semiconductor
Performance |
| Timeline |
| KOBE STEEL LTD |
| Magnachip Semiconductor |
KOBE STEEL and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KOBE STEEL and Magnachip Semiconductor
The main advantage of trading using opposite KOBE STEEL and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOBE STEEL 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.| KOBE STEEL vs. Eurasia Mining Plc | KOBE STEEL vs. Aya Gold Silver | KOBE STEEL vs. Yanzhou Coal Mining | KOBE STEEL vs. Perseus Mining Limited |
| Magnachip Semiconductor vs. NURAN WIRELESS INC | Magnachip Semiconductor vs. Brockhaus Capital Management | Magnachip Semiconductor vs. KENEDIX OFFICE INV | Magnachip Semiconductor vs. KOBE STEEL LTD |
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 Stocks Directory module to find actively traded stocks across global markets.
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