Correlation Between MagnaChip Semiconductor and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Delta Electronics 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 Delta Electronics 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 Delta Electronics Public, you can compare the effects of market volatilities on MagnaChip Semiconductor and Delta Electronics 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 Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Delta Electronics.
Diversification Opportunities for MagnaChip Semiconductor and Delta Electronics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MagnaChip and Delta is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Delta Electronics go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Delta Electronics
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to generate 0.92 times more return on investment than Delta Electronics. However, MagnaChip Semiconductor Corp is 1.09 times less risky than Delta Electronics. It trades about 0.28 of its potential returns per unit of risk. Delta Electronics Public is currently generating about 0.14 per unit of risk. If you would invest 350.00 in MagnaChip Semiconductor Corp on September 5, 2024 and sell it today you would earn a total of 68.00 from holding MagnaChip Semiconductor Corp or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. Delta Electronics Public
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Delta Electronics Public |
MagnaChip Semiconductor and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Delta Electronics
The main advantage of trading using opposite MagnaChip Semiconductor and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Delta Electronics 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 Delta Electronics will offset losses from the drop in Delta Electronics' long position.| MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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