Correlation Between MagnaChip Semiconductor and Viemed Healthcare

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Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Viemed Healthcare 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 Viemed Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and Viemed Healthcare, you can compare the effects of market volatilities on MagnaChip Semiconductor and Viemed Healthcare 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 Viemed Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Viemed Healthcare.

Diversification Opportunities for MagnaChip Semiconductor and Viemed Healthcare

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between MagnaChip and Viemed is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Viemed Healthcare go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Viemed Healthcare

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Viemed Healthcare. In addition to that, MagnaChip Semiconductor is 1.4 times more volatile than Viemed Healthcare. It trades about -0.05 of its total potential returns per unit of risk. Viemed Healthcare is currently generating about 0.14 per unit of volatility. If you would invest  747.00  in Viemed Healthcare on September 12, 2024 and sell it today you would earn a total of  133.00  from holding Viemed Healthcare or generate 17.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

MagnaChip Semiconductor  vs.  Viemed Healthcare

 Performance 
       Timeline  
MagnaChip Semiconductor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MagnaChip Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Viemed Healthcare 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Viemed Healthcare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Viemed Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

MagnaChip Semiconductor and Viemed Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MagnaChip Semiconductor and Viemed Healthcare

The main advantage of trading using opposite MagnaChip Semiconductor and Viemed Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Viemed Healthcare 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 Viemed Healthcare will offset losses from the drop in Viemed Healthcare's long position.
The idea behind MagnaChip Semiconductor and Viemed Healthcare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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