Correlation Between MagnaChip Semiconductor and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Harmony Gold 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 Harmony Gold 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 Harmony Gold Mining, you can compare the effects of market volatilities on MagnaChip Semiconductor and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Harmony Gold.
Diversification Opportunities for MagnaChip Semiconductor and Harmony Gold
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between MagnaChip and Harmony is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Harmony Gold go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Harmony Gold
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor Corp is 1.36 times less risky than Harmony Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 810.00 in Harmony Gold Mining on August 28, 2024 and sell it today you would earn a total of 120.00 from holding Harmony Gold Mining or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. Harmony Gold Mining
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Harmony Gold Mining |
MagnaChip Semiconductor and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Harmony Gold
The main advantage of trading using opposite MagnaChip Semiconductor and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Agnico Eagle Mines | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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