Correlation Between MagnaChip Semiconductor and Nexstar Media
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Nexstar Media 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 Nexstar Media 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 Nexstar Media Group, you can compare the effects of market volatilities on MagnaChip Semiconductor and Nexstar Media 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 Nexstar Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Nexstar Media.
Diversification Opportunities for MagnaChip Semiconductor and Nexstar Media
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between MagnaChip and Nexstar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Nexstar Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Media Group 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 Nexstar Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Media Group has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Nexstar Media go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Nexstar Media
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the Nexstar Media. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor Corp is 1.11 times less risky than Nexstar Media. The stock trades about -0.18 of its potential returns per unit of risk. The Nexstar Media Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 15,505 in Nexstar Media Group on November 6, 2024 and sell it today you would lose (420.00) from holding Nexstar Media Group or give up 2.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. Nexstar Media Group
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Nexstar Media Group |
MagnaChip Semiconductor and Nexstar Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Nexstar Media
The main advantage of trading using opposite MagnaChip Semiconductor and Nexstar Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Nexstar Media 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 Nexstar Media will offset losses from the drop in Nexstar Media's long position.The idea behind MagnaChip Semiconductor Corp and Nexstar Media Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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