Correlation Between Magnachip Semiconductor and Target
Can any of the company-specific risk be diversified away by investing in both Magnachip Semiconductor and Target 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 Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnachip Semiconductor and Target, you can compare the effects of market volatilities on Magnachip Semiconductor and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and Target.
Diversification Opportunities for Magnachip Semiconductor and Target
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magnachip and Target is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and Target go up and down completely randomly.
Pair Corralation between Magnachip Semiconductor and Target
Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 0.8 times more return on investment than Target. However, Magnachip Semiconductor is 1.25 times less risky than Target. It trades about 0.03 of its potential returns per unit of risk. Target is currently generating about -0.05 per unit of risk. If you would invest 382.00 in Magnachip Semiconductor on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Magnachip Semiconductor or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Magnachip Semiconductor vs. Target
Performance |
| Timeline |
| Magnachip Semiconductor |
| Target |
Magnachip Semiconductor and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnachip Semiconductor and Target
The main advantage of trading using opposite Magnachip Semiconductor and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Magnachip Semiconductor vs. Xenia Hotels Resorts | Magnachip Semiconductor vs. Pebblebrook Hotel Trust | Magnachip Semiconductor vs. CVS Health | Magnachip Semiconductor vs. Commercial Vehicle Group |
| Target vs. TOREX SEMICONDUCTOR LTD | Target vs. MagnaChip Semiconductor Corp | Target vs. Magnachip Semiconductor | Target vs. DELTA AIR LINES |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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