Correlation Between Magnachip Semiconductor and Meituan
Can any of the company-specific risk be diversified away by investing in both Magnachip Semiconductor and Meituan 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 Meituan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnachip Semiconductor and Meituan, you can compare the effects of market volatilities on Magnachip Semiconductor and Meituan 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 Meituan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and Meituan.
Diversification Opportunities for Magnachip Semiconductor and Meituan
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magnachip and Meituan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and Meituan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan 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 Meituan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and Meituan go up and down completely randomly.
Pair Corralation between Magnachip Semiconductor and Meituan
Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 0.82 times more return on investment than Meituan. However, Magnachip Semiconductor is 1.22 times less risky than Meituan. It trades about 0.26 of its potential returns per unit of risk. Meituan is currently generating about -0.17 per unit of risk. If you would invest 332.00 in Magnachip Semiconductor on September 2, 2024 and sell it today you would earn a total of 54.00 from holding Magnachip Semiconductor or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnachip Semiconductor vs. Meituan
Performance |
| Timeline |
| Magnachip Semiconductor |
| Meituan |
Magnachip Semiconductor and Meituan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnachip Semiconductor and Meituan
The main advantage of trading using opposite Magnachip Semiconductor and Meituan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, Meituan 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 Meituan will offset losses from the drop in Meituan's long position.| Magnachip Semiconductor vs. Beyond Meat | Magnachip Semiconductor vs. Titan Machinery | Magnachip Semiconductor vs. Sterling Construction | Magnachip Semiconductor vs. AUSNUTRIA DAIRY |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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