Correlation Between MagnaChip Semiconductor and Volkswagen
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on MagnaChip Semiconductor and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Volkswagen.
Diversification Opportunities for MagnaChip Semiconductor and Volkswagen
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MagnaChip and Volkswagen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Volkswagen go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Volkswagen
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the Volkswagen. In addition to that, MagnaChip Semiconductor is 1.52 times more volatile than Volkswagen AG. It trades about -0.06 of its total potential returns per unit of risk. Volkswagen AG is currently generating about -0.07 per unit of volatility. If you would invest 13,694 in Volkswagen AG on August 29, 2024 and sell it today you would lose (5,359) from holding Volkswagen AG or give up 39.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. Volkswagen AG
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Volkswagen AG |
MagnaChip Semiconductor and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Volkswagen
The main advantage of trading using opposite MagnaChip Semiconductor and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc |
| Volkswagen vs. MagnaChip Semiconductor Corp | Volkswagen vs. NXP Semiconductors NV | Volkswagen vs. TOREX SEMICONDUCTOR LTD | Volkswagen vs. Eidesvik Offshore ASA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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