Correlation Between MagnaChip Semiconductor and TRAINLINE PLC
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and TRAINLINE PLC 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 TRAINLINE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor Corp and TRAINLINE PLC LS, you can compare the effects of market volatilities on MagnaChip Semiconductor and TRAINLINE PLC 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 TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and TRAINLINE PLC.
Diversification Opportunities for MagnaChip Semiconductor and TRAINLINE PLC
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MagnaChip and TRAINLINE is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS 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 Corp are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and TRAINLINE PLC go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and TRAINLINE PLC
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to generate 0.93 times more return on investment than TRAINLINE PLC. However, MagnaChip Semiconductor Corp is 1.08 times less risky than TRAINLINE PLC. It trades about 0.19 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.1 per unit of risk. If you would invest 356.00 in MagnaChip Semiconductor Corp on September 2, 2024 and sell it today you would earn a total of 42.00 from holding MagnaChip Semiconductor Corp or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. TRAINLINE PLC LS
Performance |
| Timeline |
| MagnaChip Semiconductor |
| TRAINLINE PLC LS |
MagnaChip Semiconductor and TRAINLINE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and TRAINLINE PLC
The main advantage of trading using opposite MagnaChip Semiconductor and TRAINLINE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, TRAINLINE PLC 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 TRAINLINE PLC will offset losses from the drop in TRAINLINE PLC's long position.The idea behind MagnaChip Semiconductor Corp and TRAINLINE PLC LS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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