Correlation Between MagnaChip Semiconductor and NLIGHT
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and NLIGHT 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 NLIGHT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and nLIGHT Inc, you can compare the effects of market volatilities on MagnaChip Semiconductor and NLIGHT 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 NLIGHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and NLIGHT.
Diversification Opportunities for MagnaChip Semiconductor and NLIGHT
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between MagnaChip and NLIGHT is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT 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 NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and NLIGHT go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and NLIGHT
Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the NLIGHT. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 2.27 times less risky than NLIGHT. The stock trades about -0.27 of its potential returns per unit of risk. The nLIGHT Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,064 in nLIGHT Inc on August 24, 2024 and sell it today you would earn a total of 47.00 from holding nLIGHT Inc or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MagnaChip Semiconductor vs. nLIGHT Inc
Performance |
| Timeline |
| MagnaChip Semiconductor |
| nLIGHT Inc |
MagnaChip Semiconductor and NLIGHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and NLIGHT
The main advantage of trading using opposite MagnaChip Semiconductor and NLIGHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, NLIGHT 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 NLIGHT will offset losses from the drop in NLIGHT's long position.| MagnaChip Semiconductor vs. Eshallgo Class A | MagnaChip Semiconductor vs. Amtech Systems | MagnaChip Semiconductor vs. Gold Fields Ltd | MagnaChip Semiconductor vs. Aegean Airlines 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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