Correlation Between SOLSTAD OFFSHORE and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and MagnaChip Semiconductor.
Diversification Opportunities for SOLSTAD OFFSHORE and MagnaChip Semiconductor
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SOLSTAD and MagnaChip is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between SOLSTAD OFFSHORE and MagnaChip Semiconductor
Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 1.25 times more return on investment than MagnaChip Semiconductor. However, SOLSTAD OFFSHORE is 1.25 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.02 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.06 per unit of risk. If you would invest 328.00 in SOLSTAD OFFSHORE NK on September 12, 2024 and sell it today you would earn a total of 2.00 from holding SOLSTAD OFFSHORE NK or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
SOLSTAD OFFSHORE NK vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| SOLSTAD OFFSHORE |
| MagnaChip Semiconductor |
SOLSTAD OFFSHORE and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOLSTAD OFFSHORE and MagnaChip Semiconductor
The main advantage of trading using opposite SOLSTAD OFFSHORE and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE 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.| SOLSTAD OFFSHORE vs. Superior Plus Corp | SOLSTAD OFFSHORE vs. SIVERS SEMICONDUCTORS AB | SOLSTAD OFFSHORE vs. CHINA HUARONG ENERHD 50 | SOLSTAD OFFSHORE vs. NORDIC HALIBUT AS |
| MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc | MagnaChip Semiconductor vs. Apple Inc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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