Correlation Between MagnaChip Semiconductor and BP Plc
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and BP 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 BP 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 BP plc, you can compare the effects of market volatilities on MagnaChip Semiconductor and BP 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and BP Plc.
Diversification Opportunities for MagnaChip Semiconductor and BP Plc
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MagnaChip and BPE5 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and BP Plc go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and BP Plc
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the BP Plc. In addition to that, MagnaChip Semiconductor is 1.86 times more volatile than BP plc. It trades about -0.03 of its total potential returns per unit of risk. BP plc is currently generating about -0.05 per unit of volatility. If you would invest 532.00 in BP plc on September 14, 2024 and sell it today you would lose (53.00) from holding BP plc or give up 9.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. BP plc
Performance |
| Timeline |
| MagnaChip Semiconductor |
| BP plc |
MagnaChip Semiconductor and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and BP Plc
The main advantage of trading using opposite MagnaChip Semiconductor and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, BP 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 BP Plc will offset losses from the drop in BP Plc's long position.| MagnaChip Semiconductor vs. QUEEN S ROAD | MagnaChip Semiconductor vs. Nordic Semiconductor ASA | MagnaChip Semiconductor vs. ELMOS SEMICONDUCTOR | MagnaChip Semiconductor vs. BII Railway Transportation |
| BP Plc vs. National Beverage Corp | BP Plc vs. Charoen Pokphand Foods | BP Plc vs. Meiko Electronics Co | BP Plc vs. Arrow Electronics |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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