Correlation Between MagnaChip Semiconductor and Applied Materials
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on MagnaChip Semiconductor and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Applied Materials.
Diversification Opportunities for MagnaChip Semiconductor and Applied Materials
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MagnaChip and Applied is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Applied Materials go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Applied Materials
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the Applied Materials. In addition to that, MagnaChip Semiconductor is 1.0 times more volatile than Applied Materials. It trades about -0.05 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.05 per unit of volatility. If you would invest 10,596 in Applied Materials on September 3, 2024 and sell it today you would earn a total of 6,282 from holding Applied Materials or generate 59.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. Applied Materials
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Applied Materials |
MagnaChip Semiconductor and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Applied Materials
The main advantage of trading using opposite MagnaChip Semiconductor and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| MagnaChip Semiconductor vs. Air Lease | MagnaChip Semiconductor vs. Global Ship Lease | MagnaChip Semiconductor vs. Titan Machinery | MagnaChip Semiconductor vs. GREENX METALS LTD |
| Applied Materials vs. ASML HOLDING NY | Applied Materials vs. ASML Holding NV | Applied Materials vs. ASML Holding NV | Applied Materials vs. Lam Research |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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