Correlation Between Magnachip Semiconductor and AB Volvo
Can any of the company-specific risk be diversified away by investing in both Magnachip Semiconductor and AB Volvo 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 AB Volvo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnachip Semiconductor and AB Volvo, you can compare the effects of market volatilities on Magnachip Semiconductor and AB Volvo 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 AB Volvo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and AB Volvo.
Diversification Opportunities for Magnachip Semiconductor and AB Volvo
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magnachip and VOL1 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo 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 AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and AB Volvo go up and down completely randomly.
Pair Corralation between Magnachip Semiconductor and AB Volvo
Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 2.51 times more return on investment than AB Volvo. However, Magnachip Semiconductor is 2.51 times more volatile than AB Volvo. It trades about 0.16 of its potential returns per unit of risk. AB Volvo is currently generating about 0.13 per unit of risk. If you would invest 348.00 in Magnachip Semiconductor on September 14, 2024 and sell it today you would earn a total of 40.00 from holding Magnachip Semiconductor or generate 11.49% 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. AB Volvo
Performance |
| Timeline |
| Magnachip Semiconductor |
| AB Volvo |
Magnachip Semiconductor and AB Volvo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnachip Semiconductor and AB Volvo
The main advantage of trading using opposite Magnachip Semiconductor and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, AB Volvo 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 AB Volvo will offset losses from the drop in AB Volvo's long position.| Magnachip Semiconductor vs. LION ONE METALS | Magnachip Semiconductor vs. EMBARK EDUCATION LTD | Magnachip Semiconductor vs. Grand Canyon Education | Magnachip Semiconductor vs. Perdoceo Education |
| AB Volvo vs. Magnachip Semiconductor | AB Volvo vs. Methode Electronics | AB Volvo vs. JAPAN TOBACCO UNSPADR12 | AB Volvo vs. Schweizer Electronic AG |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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