Correlation Between LION ONE and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and Magnachip Semiconductor, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Magnachip Semiconductor.
Diversification Opportunities for LION ONE and Magnachip Semiconductor
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LION and Magnachip is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between LION ONE and Magnachip Semiconductor
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Magnachip Semiconductor. In addition to that, LION ONE is 1.33 times more volatile than Magnachip Semiconductor. It trades about -0.15 of its total potential returns per unit of risk. Magnachip Semiconductor is currently generating about 0.16 per unit of volatility. If you would invest 348.00 in Magnachip Semiconductor on September 14, 2024 and sell it today you would earn a total of 40.00 from holding Magnachip Semiconductor or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Magnachip Semiconductor
Performance |
| Timeline |
| LION ONE METALS |
| Magnachip Semiconductor |
LION ONE and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Magnachip Semiconductor
The main advantage of trading using opposite LION ONE and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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 LION ONE METALS 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. LION ONE METALS | Magnachip Semiconductor vs. EMBARK EDUCATION LTD | Magnachip Semiconductor vs. Grand Canyon Education | Magnachip Semiconductor vs. Perdoceo Education |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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