Correlation Between MagnaChip Semiconductor and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT, you can compare the effects of market volatilities on MagnaChip Semiconductor and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and CDL INVESTMENT.
Diversification Opportunities for MagnaChip Semiconductor and CDL INVESTMENT
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MagnaChip and CDL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and CDL INVESTMENT
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the CDL INVESTMENT. In addition to that, MagnaChip Semiconductor is 2.1 times more volatile than CDL INVESTMENT. It trades about -0.01 of its total potential returns per unit of risk. CDL INVESTMENT is currently generating about 0.24 per unit of volatility. If you would invest 39.00 in CDL INVESTMENT on September 1, 2024 and sell it today you would earn a total of 4.00 from holding CDL INVESTMENT or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. CDL INVESTMENT
Performance |
| Timeline |
| MagnaChip Semiconductor |
| CDL INVESTMENT |
MagnaChip Semiconductor and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and CDL INVESTMENT
The main advantage of trading using opposite MagnaChip Semiconductor and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| MagnaChip Semiconductor vs. Cardinal Health | MagnaChip Semiconductor vs. SMA Solar Technology | MagnaChip Semiconductor vs. Ramsay Health Care | MagnaChip Semiconductor vs. AECOM TECHNOLOGY |
| CDL INVESTMENT vs. SIVERS SEMICONDUCTORS AB | CDL INVESTMENT vs. Darden Restaurants | CDL INVESTMENT vs. Reliance Steel Aluminum | CDL INVESTMENT vs. Q2M Managementberatung AG |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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