Correlation Between MagnaChip Semiconductor and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and SolarEdge Technologies 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 SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and SolarEdge Technologies, you can compare the effects of market volatilities on MagnaChip Semiconductor and SolarEdge Technologies 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 SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and SolarEdge Technologies.
Diversification Opportunities for MagnaChip Semiconductor and SolarEdge Technologies
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MagnaChip and SolarEdge is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and SolarEdge Technologies
Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 6.33 times less return on investment than SolarEdge Technologies. But when comparing it to its historical volatility, MagnaChip Semiconductor is 2.75 times less risky than SolarEdge Technologies. It trades about 0.0 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,360 in SolarEdge Technologies on November 1, 2024 and sell it today you would lose (29.00) from holding SolarEdge Technologies or give up 2.13% 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. SolarEdge Technologies
Performance |
| Timeline |
| MagnaChip Semiconductor |
| SolarEdge Technologies |
MagnaChip Semiconductor and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and SolarEdge Technologies
The main advantage of trading using opposite MagnaChip Semiconductor and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. Enphase Energy |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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