Correlation Between Magnachip Semiconductor and ASML HOLDING
Can any of the company-specific risk be diversified away by investing in both Magnachip Semiconductor and ASML HOLDING 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 ASML HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnachip Semiconductor and ASML HOLDING NY, you can compare the effects of market volatilities on Magnachip Semiconductor and ASML HOLDING 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 ASML HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and ASML HOLDING.
Diversification Opportunities for Magnachip Semiconductor and ASML HOLDING
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnachip and ASML is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and ASML HOLDING NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML HOLDING NY 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 ASML HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML HOLDING NY has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and ASML HOLDING go up and down completely randomly.
Pair Corralation between Magnachip Semiconductor and ASML HOLDING
Assuming the 90 days horizon Magnachip Semiconductor is expected to under-perform the ASML HOLDING. In addition to that, Magnachip Semiconductor is 1.0 times more volatile than ASML HOLDING NY. It trades about -0.04 of its total potential returns per unit of risk. ASML HOLDING NY is currently generating about 0.02 per unit of volatility. If you would invest 64,834 in ASML HOLDING NY on September 4, 2024 and sell it today you would earn a total of 766.00 from holding ASML HOLDING NY or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnachip Semiconductor vs. ASML HOLDING NY
Performance |
| Timeline |
| Magnachip Semiconductor |
| ASML HOLDING NY |
Magnachip Semiconductor and ASML HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnachip Semiconductor and ASML HOLDING
The main advantage of trading using opposite Magnachip Semiconductor and ASML HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, ASML HOLDING 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 ASML HOLDING will offset losses from the drop in ASML HOLDING's long position.| Magnachip Semiconductor vs. SLR Investment Corp | Magnachip Semiconductor vs. New Residential Investment | Magnachip Semiconductor vs. COMMERCIAL VEHICLE | Magnachip Semiconductor vs. Apollo Investment Corp |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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