Correlation Between MagnaChip Semiconductor and CARSALES
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on MagnaChip Semiconductor and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and CARSALES.
Diversification Opportunities for MagnaChip Semiconductor and CARSALES
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MagnaChip and CARSALES is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and CARSALES go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and CARSALES
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the CARSALES. In addition to that, MagnaChip Semiconductor is 1.54 times more volatile than CARSALESCOM. It trades about -0.06 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.09 per unit of volatility. If you would invest 1,384 in CARSALESCOM on September 1, 2024 and sell it today you would earn a total of 1,176 from holding CARSALESCOM or generate 84.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor Corp vs. CARSALESCOM
Performance |
| Timeline |
| MagnaChip Semiconductor |
| CARSALESCOM |
MagnaChip Semiconductor and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and CARSALES
The main advantage of trading using opposite MagnaChip Semiconductor and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| MagnaChip Semiconductor vs. Cardinal Health | MagnaChip Semiconductor vs. SMA Solar Technology | MagnaChip Semiconductor vs. Ramsay Health Care | MagnaChip Semiconductor vs. AECOM TECHNOLOGY |
| CARSALES vs. CNVISION MEDIA | CARSALES vs. OURGAME INTHOLDL 00005 | CARSALES vs. Playa Hotels Resorts | CARSALES vs. Universal Entertainment |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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