Correlation Between MagnaChip Semiconductor and HK Electric
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and HK Electric 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 HK Electric 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 HK Electric Investments, you can compare the effects of market volatilities on MagnaChip Semiconductor and HK Electric 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 HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and HK Electric.
Diversification Opportunities for MagnaChip Semiconductor and HK Electric
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MagnaChip and HKT is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments 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 HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and HK Electric go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and HK Electric
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the HK Electric. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor Corp is 1.09 times less risky than HK Electric. The stock trades about -0.03 of its potential returns per unit of risk. The HK Electric Investments is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 41.00 in HK Electric Investments on September 3, 2024 and sell it today you would earn a total of 21.00 from holding HK Electric Investments or generate 51.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. HK Electric Investments
Performance |
| Timeline |
| MagnaChip Semiconductor |
| HK Electric Investments |
MagnaChip Semiconductor and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and HK Electric
The main advantage of trading using opposite MagnaChip Semiconductor and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| MagnaChip Semiconductor vs. Air Lease | MagnaChip Semiconductor vs. Global Ship Lease | MagnaChip Semiconductor vs. Titan Machinery | MagnaChip Semiconductor vs. GREENX METALS LTD |
| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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