Correlation Between Magnachip Semiconductor and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Magnachip Semiconductor and BE 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 Magnachip Semiconductor and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnachip Semiconductor and BE Semiconductor Industries, you can compare the effects of market volatilities on Magnachip Semiconductor and BE 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 Magnachip Semiconductor with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and BE Semiconductor.
Diversification Opportunities for Magnachip Semiconductor and BE Semiconductor
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magnachip and BSI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and BE Semiconductor go up and down completely randomly.
Pair Corralation between Magnachip Semiconductor and BE Semiconductor
Assuming the 90 days horizon Magnachip Semiconductor is expected to under-perform the BE Semiconductor. In addition to that, Magnachip Semiconductor is 1.58 times more volatile than BE Semiconductor Industries. It trades about -0.13 of its total potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.12 per unit of volatility. If you would invest 10,500 in BE Semiconductor Industries on August 29, 2024 and sell it today you would earn a total of 690.00 from holding BE Semiconductor Industries or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnachip Semiconductor vs. BE Semiconductor Industries
Performance |
| Timeline |
| Magnachip Semiconductor |
| BE Semiconductor Ind |
Magnachip Semiconductor and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnachip Semiconductor and BE Semiconductor
The main advantage of trading using opposite Magnachip Semiconductor and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, BE 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Magnachip Semiconductor vs. New Residential Investment | Magnachip Semiconductor vs. CDL INVESTMENT | Magnachip Semiconductor vs. Jacquet Metal Service | Magnachip Semiconductor vs. DIVERSIFIED ROYALTY |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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