Correlation Between MagnaChip Semiconductor and Lam Research
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Lam Research 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 Lam Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and Lam Research Corp, you can compare the effects of market volatilities on MagnaChip Semiconductor and Lam Research 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 Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Lam Research.
Diversification Opportunities for MagnaChip Semiconductor and Lam Research
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MagnaChip and Lam is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Lam Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research Corp 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 Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research Corp has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Lam Research go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Lam Research
Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Lam Research. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 1.06 times less risky than Lam Research. The stock trades about -0.07 of its potential returns per unit of risk. The Lam Research Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,939 in Lam Research Corp on November 1, 2024 and sell it today you would earn a total of 3,173 from holding Lam Research Corp or generate 64.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
MagnaChip Semiconductor vs. Lam Research Corp
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Lam Research Corp |
MagnaChip Semiconductor and Lam Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Lam Research
The main advantage of trading using opposite MagnaChip Semiconductor and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Lam Research 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 Lam Research will offset losses from the drop in Lam Research's long position.| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
| Lam Research vs. Diodes Incorporated | Lam Research vs. Daqo New Energy | Lam Research vs. Micron Technology | Lam Research vs. MagnaChip Semiconductor |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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