Correlation Between MagnaChip Semiconductor and China Coal
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and China Coal 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 China Coal 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 China Coal Energy, you can compare the effects of market volatilities on MagnaChip Semiconductor and China Coal 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 China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and China Coal.
Diversification Opportunities for MagnaChip Semiconductor and China Coal
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between MagnaChip and China is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy 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 China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and China Coal go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and China Coal
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the China Coal. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor Corp is 1.25 times less risky than China Coal. The stock trades about -0.05 of its potential returns per unit of risk. The China Coal Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 51.00 in China Coal Energy on September 12, 2024 and sell it today you would earn a total of 65.00 from holding China Coal Energy or generate 127.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. China Coal Energy
Performance |
| Timeline |
| MagnaChip Semiconductor |
| China Coal Energy |
MagnaChip Semiconductor and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and China Coal
The main advantage of trading using opposite MagnaChip Semiconductor and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, China Coal 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 China Coal will offset losses from the drop in China Coal's long position.| MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc |
| China Coal vs. MagnaChip Semiconductor Corp | China Coal vs. MOLSON RS BEVERAGE | China Coal vs. Tower Semiconductor | China Coal vs. Ebro Foods SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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