Correlation Between MagnaChip Semiconductor and ATLANTIC LITHIUM
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and ATLANTIC LITHIUM 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 ATLANTIC LITHIUM 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 ATLANTIC LITHIUM LTD, you can compare the effects of market volatilities on MagnaChip Semiconductor and ATLANTIC LITHIUM 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 ATLANTIC LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and ATLANTIC LITHIUM.
Diversification Opportunities for MagnaChip Semiconductor and ATLANTIC LITHIUM
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MagnaChip and ATLANTIC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and ATLANTIC LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATLANTIC LITHIUM LTD 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 ATLANTIC LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATLANTIC LITHIUM LTD has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and ATLANTIC LITHIUM go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and ATLANTIC LITHIUM
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the ATLANTIC LITHIUM. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor Corp is 3.14 times less risky than ATLANTIC LITHIUM. The stock trades about -0.07 of its potential returns per unit of risk. The ATLANTIC LITHIUM LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 26.00 in ATLANTIC LITHIUM LTD on September 12, 2024 and sell it today you would lose (12.00) from holding ATLANTIC LITHIUM LTD or give up 46.15% 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. ATLANTIC LITHIUM LTD
Performance |
| Timeline |
| MagnaChip Semiconductor |
| ATLANTIC LITHIUM LTD |
MagnaChip Semiconductor and ATLANTIC LITHIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and ATLANTIC LITHIUM
The main advantage of trading using opposite MagnaChip Semiconductor and ATLANTIC LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, ATLANTIC LITHIUM 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 ATLANTIC LITHIUM will offset losses from the drop in ATLANTIC LITHIUM's long position.| MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc |
| ATLANTIC LITHIUM vs. Apple Inc | ATLANTIC LITHIUM vs. Apple Inc | ATLANTIC LITHIUM vs. Apple Inc | ATLANTIC LITHIUM vs. Apple Inc |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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