Correlation Between MagnaChip Semiconductor and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Qantas Airways 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 Qantas Airways 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 Qantas Airways Limited, you can compare the effects of market volatilities on MagnaChip Semiconductor and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Qantas Airways.
Diversification Opportunities for MagnaChip Semiconductor and Qantas Airways
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MagnaChip and Qantas is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Qantas Airways Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Qantas Airways go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Qantas Airways
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to generate 1.97 times more return on investment than Qantas Airways. However, MagnaChip Semiconductor is 1.97 times more volatile than Qantas Airways Limited. It trades about 0.24 of its potential returns per unit of risk. Qantas Airways Limited is currently generating about -0.07 per unit of risk. If you would invest 378.00 in MagnaChip Semiconductor Corp on November 28, 2024 and sell it today you would earn a total of 72.00 from holding MagnaChip Semiconductor Corp or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. Qantas Airways Limited
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Qantas Airways |
MagnaChip Semiconductor and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Qantas Airways
The main advantage of trading using opposite MagnaChip Semiconductor and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| MagnaChip Semiconductor vs. RYANAIR HLDGS ADR | MagnaChip Semiconductor vs. InPlay Oil Corp | MagnaChip Semiconductor vs. Playtech plc | MagnaChip Semiconductor vs. Norwegian Air Shuttle |
| Qantas Airways vs. Calibre Mining Corp | Qantas Airways vs. PATTIES FOODS | Qantas Airways vs. GRIFFIN MINING LTD | Qantas Airways vs. CAL MAINE FOODS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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