Correlation Between Teradyne and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Teradyne 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 Teradyne and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and MagnaChip Semiconductor, you can compare the effects of market volatilities on Teradyne 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 Teradyne with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and MagnaChip Semiconductor.
Diversification Opportunities for Teradyne and MagnaChip Semiconductor
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teradyne and MagnaChip is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Teradyne 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 Teradyne 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 Teradyne i.e., Teradyne and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Teradyne and MagnaChip Semiconductor
Considering the 90-day investment horizon Teradyne is expected to generate 0.46 times more return on investment than MagnaChip Semiconductor. However, Teradyne is 2.15 times less risky than MagnaChip Semiconductor. It trades about -0.02 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.04 per unit of risk. If you would invest 10,936 in Teradyne on August 31, 2024 and sell it today you would lose (127.00) from holding Teradyne or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Teradyne |
| MagnaChip Semiconductor |
Teradyne and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and MagnaChip Semiconductor
The main advantage of trading using opposite Teradyne and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne 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.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear | MagnaChip Semiconductor vs. nLIGHT 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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