Correlation Between SEALED AIR and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both SEALED AIR 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 SEALED AIR and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on SEALED AIR 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 SEALED AIR with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and MagnaChip Semiconductor.
Diversification Opportunities for SEALED AIR and MagnaChip Semiconductor
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SEALED and MagnaChip is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between SEALED AIR and MagnaChip Semiconductor
Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.7 times more return on investment than MagnaChip Semiconductor. However, SEALED AIR is 1.43 times less risky than MagnaChip Semiconductor. It trades about 0.02 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.03 per unit of risk. If you would invest 3,157 in SEALED AIR on November 1, 2024 and sell it today you would earn a total of 203.00 from holding SEALED AIR or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| SEALED AIR |
| MagnaChip Semiconductor |
SEALED AIR and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and MagnaChip Semiconductor
The main advantage of trading using opposite SEALED AIR and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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.| SEALED AIR vs. Perseus Mining Limited | SEALED AIR vs. Calibre Mining Corp | SEALED AIR vs. DATATEC LTD 2 | SEALED AIR vs. ADRIATIC METALS LS 013355 |
| MagnaChip Semiconductor vs. Norwegian Air Shuttle | MagnaChip Semiconductor vs. SEALED AIR | MagnaChip Semiconductor vs. NH HOTEL GROUP | MagnaChip Semiconductor vs. Choice Hotels International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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