Correlation Between Nordic Semiconductor and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and MagnaChip Semiconductor 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 Nordic Semiconductor and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Nordic Semiconductor and MagnaChip Semiconductor 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 Nordic Semiconductor with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and MagnaChip Semiconductor.
Diversification Opportunities for Nordic Semiconductor and MagnaChip Semiconductor
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordic and MagnaChip is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Nordic 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 Nordic Semiconductor ASA are associated (or correlated) with MagnaChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MagnaChip Semiconductor has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and MagnaChip Semiconductor
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.74 times more return on investment than MagnaChip Semiconductor. However, Nordic Semiconductor is 1.74 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.29 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about 0.36 per unit of risk. If you would invest 950.00 in Nordic Semiconductor ASA on November 27, 2024 and sell it today you would earn a total of 347.00 from holding Nordic Semiconductor ASA or generate 36.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| MagnaChip Semiconductor |
Nordic Semiconductor and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and MagnaChip Semiconductor
The main advantage of trading using opposite Nordic Semiconductor and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, MagnaChip Semiconductor 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 MagnaChip Semiconductor will offset losses from the drop in MagnaChip Semiconductor's long position.| Nordic Semiconductor vs. PennyMac Mortgage Investment | Nordic Semiconductor vs. LIFENET INSURANCE CO | Nordic Semiconductor vs. New Residential Investment | Nordic Semiconductor vs. Ping An Insurance |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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