Correlation Between Magnachip Semiconductor and Axonics
Can any of the company-specific risk be diversified away by investing in both Magnachip Semiconductor and Axonics 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 Axonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnachip Semiconductor and Axonics, you can compare the effects of market volatilities on Magnachip Semiconductor and Axonics 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 Axonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and Axonics.
Diversification Opportunities for Magnachip Semiconductor and Axonics
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magnachip and Axonics is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and Axonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonics 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 Axonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonics has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and Axonics go up and down completely randomly.
Pair Corralation between Magnachip Semiconductor and Axonics
Assuming the 90 days horizon Magnachip Semiconductor is expected to under-perform the Axonics. In addition to that, Magnachip Semiconductor is 1.5 times more volatile than Axonics. It trades about 0.0 of its total potential returns per unit of risk. Axonics is currently generating about 0.09 per unit of volatility. If you would invest 5,850 in Axonics on September 12, 2024 and sell it today you would earn a total of 500.00 from holding Axonics or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Magnachip Semiconductor vs. Axonics
Performance |
| Timeline |
| Magnachip Semiconductor |
| Axonics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Magnachip Semiconductor and Axonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnachip Semiconductor and Axonics
The main advantage of trading using opposite Magnachip Semiconductor and Axonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, Axonics 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 Axonics will offset losses from the drop in Axonics' long position.The idea behind Magnachip Semiconductor and Axonics 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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