Correlation Between MagnaChip Semiconductor and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and BORR DRILLING 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 BORR DRILLING 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 BORR DRILLING NEW, you can compare the effects of market volatilities on MagnaChip Semiconductor and BORR DRILLING 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 BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and BORR DRILLING.
Diversification Opportunities for MagnaChip Semiconductor and BORR DRILLING
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MagnaChip and BORR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and BORR DRILLING go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and BORR DRILLING
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the BORR DRILLING. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor Corp is 1.23 times less risky than BORR DRILLING. The stock trades about -0.05 of its potential returns per unit of risk. The BORR DRILLING NEW is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 494.00 in BORR DRILLING NEW on September 21, 2024 and sell it today you would lose (117.00) from holding BORR DRILLING NEW or give up 23.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. BORR DRILLING NEW
Performance |
| Timeline |
| MagnaChip Semiconductor |
| BORR DRILLING NEW |
MagnaChip Semiconductor and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and BORR DRILLING
The main advantage of trading using opposite MagnaChip Semiconductor and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| MagnaChip Semiconductor vs. FAST RETAIL ADR | MagnaChip Semiconductor vs. NXP Semiconductors NV | MagnaChip Semiconductor vs. Nordic Semiconductor ASA | MagnaChip Semiconductor vs. Carsales |
| BORR DRILLING vs. Nabors Industries | BORR DRILLING vs. PRECISION DRILLING P | BORR DRILLING vs. Daldrup Shne Aktiengesellschaft |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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