Correlation Between MagnaChip Semiconductor and Canaan
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Canaan 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 MagnaChip Semiconductor and Canaan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and Canaan Inc, you can compare the effects of market volatilities on MagnaChip Semiconductor and Canaan 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 MagnaChip Semiconductor with a short position of Canaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Canaan.
Diversification Opportunities for MagnaChip Semiconductor and Canaan
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MagnaChip and Canaan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and MagnaChip Semiconductor 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 MagnaChip Semiconductor are associated (or correlated) with Canaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaan Inc has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Canaan go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Canaan
Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 0.88 times more return on investment than Canaan. However, MagnaChip Semiconductor is 1.13 times less risky than Canaan. It trades about -0.27 of its potential returns per unit of risk. Canaan Inc is currently generating about -0.27 per unit of risk. If you would invest 382.00 in MagnaChip Semiconductor on January 11, 2025 and sell it today you would lose (104.00) from holding MagnaChip Semiconductor or give up 27.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor vs. Canaan Inc
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Canaan Inc |
MagnaChip Semiconductor and Canaan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Canaan
The main advantage of trading using opposite MagnaChip Semiconductor and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Canaan 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 Canaan will offset losses from the drop in Canaan's long position.| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
| Canaan vs. 3D Systems | Canaan vs. NetApp Inc | Canaan vs. Rigetti Computing | Canaan vs. Logitech International SA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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