Correlation Between PULSION Medical and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both PULSION Medical 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 PULSION Medical and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PULSION Medical Systems and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on PULSION Medical 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 PULSION Medical with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of PULSION Medical and MagnaChip Semiconductor.
Diversification Opportunities for PULSION Medical and MagnaChip Semiconductor
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PULSION and MagnaChip is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PULSION Medical Systems and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and PULSION Medical 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 PULSION Medical Systems 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 PULSION Medical i.e., PULSION Medical and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between PULSION Medical and MagnaChip Semiconductor
Assuming the 90 days trading horizon PULSION Medical Systems is expected to generate 0.79 times more return on investment than MagnaChip Semiconductor. However, PULSION Medical Systems is 1.26 times less risky than MagnaChip Semiconductor. It trades about 0.0 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.06 per unit of risk. If you would invest 1,695 in PULSION Medical Systems on October 11, 2024 and sell it today you would lose (95.00) from holding PULSION Medical Systems or give up 5.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
PULSION Medical Systems vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| PULSION Medical Systems |
| MagnaChip Semiconductor |
PULSION Medical and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PULSION Medical and MagnaChip Semiconductor
The main advantage of trading using opposite PULSION Medical and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PULSION Medical 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.| PULSION Medical vs. PT Bumi Resources | PULSION Medical vs. China Construction Bank | PULSION Medical vs. PT Bank Rakyat | PULSION Medical vs. PT Bank Central |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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