Correlation Between SEKISUI CHEMICAL and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both SEKISUI CHEMICAL and Magnachip Semiconductor 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 SEKISUI CHEMICAL and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEKISUI CHEMICAL and Magnachip Semiconductor, you can compare the effects of market volatilities on SEKISUI CHEMICAL and Magnachip Semiconductor 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 SEKISUI CHEMICAL with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEKISUI CHEMICAL and Magnachip Semiconductor.
Diversification Opportunities for SEKISUI CHEMICAL and Magnachip Semiconductor
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEKISUI and Magnachip is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SEKISUI CHEMICAL and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and SEKISUI CHEMICAL 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 SEKISUI CHEMICAL are associated (or correlated) with Magnachip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnachip Semiconductor has no effect on the direction of SEKISUI CHEMICAL i.e., SEKISUI CHEMICAL and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between SEKISUI CHEMICAL and Magnachip Semiconductor
Assuming the 90 days trading horizon SEKISUI CHEMICAL is expected to generate 0.32 times more return on investment than Magnachip Semiconductor. However, SEKISUI CHEMICAL is 3.09 times less risky than Magnachip Semiconductor. It trades about 0.34 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.18 per unit of risk. If you would invest 1,280 in SEKISUI CHEMICAL on August 27, 2024 and sell it today you would earn a total of 130.00 from holding SEKISUI CHEMICAL or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEKISUI CHEMICAL vs. Magnachip Semiconductor
Performance |
| Timeline |
| SEKISUI CHEMICAL |
| Magnachip Semiconductor |
SEKISUI CHEMICAL and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEKISUI CHEMICAL and Magnachip Semiconductor
The main advantage of trading using opposite SEKISUI CHEMICAL and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEKISUI CHEMICAL position performs unexpectedly, Magnachip Semiconductor 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 Magnachip Semiconductor will offset losses from the drop in Magnachip Semiconductor's long position.| SEKISUI CHEMICAL vs. Apple Inc | SEKISUI CHEMICAL vs. Apple Inc | SEKISUI CHEMICAL vs. Apple Inc | SEKISUI CHEMICAL vs. Microsoft |
| Magnachip Semiconductor vs. SEKISUI CHEMICAL | Magnachip Semiconductor vs. Eastman Chemical | Magnachip Semiconductor vs. GOODYEAR T RUBBER | Magnachip Semiconductor vs. EAGLE MATERIALS |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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