Correlation Between MagnaChip Semiconductor and MKS Instruments
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and MKS Instruments 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 MKS Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and MKS Instruments, you can compare the effects of market volatilities on MagnaChip Semiconductor and MKS Instruments 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 MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and MKS Instruments.
Diversification Opportunities for MagnaChip Semiconductor and MKS Instruments
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MagnaChip and MKS is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments 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 MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and MKS Instruments go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and MKS Instruments
Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the MKS Instruments. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 1.11 times less risky than MKS Instruments. The stock trades about -0.05 of its potential returns per unit of risk. The MKS Instruments is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,015 in MKS Instruments on November 9, 2024 and sell it today you would earn a total of 2,179 from holding MKS Instruments or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor vs. MKS Instruments
Performance |
| Timeline |
| MagnaChip Semiconductor |
| MKS Instruments |
MagnaChip Semiconductor and MKS Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and MKS Instruments
The main advantage of trading using opposite MagnaChip Semiconductor and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, MKS Instruments 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 MKS Instruments will offset losses from the drop in MKS Instruments' long position.| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
| MKS Instruments vs. Vontier Corp | MKS Instruments vs. Teledyne Technologies Incorporated | MKS Instruments vs. ESCO Technologies | MKS Instruments vs. Sensata Technologies Holding |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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