Correlation Between Magnachip Semiconductor and Patterson-UTI Energy
Can any of the company-specific risk be diversified away by investing in both Magnachip Semiconductor and Patterson-UTI Energy 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 Patterson-UTI Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnachip Semiconductor and Patterson UTI Energy, you can compare the effects of market volatilities on Magnachip Semiconductor and Patterson-UTI Energy 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 Patterson-UTI Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and Patterson-UTI Energy.
Diversification Opportunities for Magnachip Semiconductor and Patterson-UTI Energy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magnachip and Patterson-UTI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and Patterson UTI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson UTI Energy 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 Patterson-UTI Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson UTI Energy has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and Patterson-UTI Energy go up and down completely randomly.
Pair Corralation between Magnachip Semiconductor and Patterson-UTI Energy
Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 1.04 times more return on investment than Patterson-UTI Energy. However, Magnachip Semiconductor is 1.04 times more volatile than Patterson UTI Energy. It trades about 0.01 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about 0.01 per unit of risk. If you would invest 390.00 in Magnachip Semiconductor on September 3, 2024 and sell it today you would lose (4.00) from holding Magnachip Semiconductor or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnachip Semiconductor vs. Patterson UTI Energy
Performance |
| Timeline |
| Magnachip Semiconductor |
| Patterson UTI Energy |
Magnachip Semiconductor and Patterson-UTI Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnachip Semiconductor and Patterson-UTI Energy
The main advantage of trading using opposite Magnachip Semiconductor and Patterson-UTI Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, Patterson-UTI Energy 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 Patterson-UTI Energy will offset losses from the drop in Patterson-UTI Energy's long position.| Magnachip Semiconductor vs. Virtus Investment Partners | Magnachip Semiconductor vs. PennantPark Investment | Magnachip Semiconductor vs. MGIC INVESTMENT | Magnachip Semiconductor vs. HK Electric Investments |
| Patterson-UTI Energy vs. TOREX SEMICONDUCTOR LTD | Patterson-UTI Energy vs. Elmos Semiconductor SE | Patterson-UTI Energy vs. Laureate Education | Patterson-UTI Energy vs. Magnachip Semiconductor |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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