Correlation Between Power Integrations and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Power Integrations 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 Power Integrations and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Integrations and MagnaChip Semiconductor, you can compare the effects of market volatilities on Power Integrations 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 Power Integrations with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and MagnaChip Semiconductor.
Diversification Opportunities for Power Integrations and MagnaChip Semiconductor
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Power and MagnaChip is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Power Integrations 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 Power Integrations 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 Power Integrations i.e., Power Integrations and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Power Integrations and MagnaChip Semiconductor
Given the investment horizon of 90 days Power Integrations is expected to generate 0.95 times more return on investment than MagnaChip Semiconductor. However, Power Integrations is 1.05 times less risky than MagnaChip Semiconductor. It trades about -0.06 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.09 per unit of risk. If you would invest 7,693 in Power Integrations on August 24, 2024 and sell it today you would lose (1,452) from holding Power Integrations or give up 18.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Integrations vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Power Integrations |
| MagnaChip Semiconductor |
Power Integrations and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Integrations and MagnaChip Semiconductor
The main advantage of trading using opposite Power Integrations and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations 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.| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
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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