Correlation Between United Airlines and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both United Airlines 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 United Airlines and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Magnachip Semiconductor, you can compare the effects of market volatilities on United Airlines 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 United Airlines with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Magnachip Semiconductor.
Diversification Opportunities for United Airlines and Magnachip Semiconductor
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Magnachip is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and United Airlines 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 United Airlines Holdings 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 United Airlines i.e., United Airlines and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between United Airlines and Magnachip Semiconductor
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.05 times more return on investment than Magnachip Semiconductor. However, United Airlines is 1.05 times more volatile than Magnachip Semiconductor. It trades about 0.13 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.06 per unit of risk. If you would invest 3,982 in United Airlines Holdings on September 12, 2024 and sell it today you would earn a total of 5,314 from holding United Airlines Holdings or generate 133.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Magnachip Semiconductor
Performance |
| Timeline |
| United Airlines Holdings |
| Magnachip Semiconductor |
United Airlines and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Magnachip Semiconductor
The main advantage of trading using opposite United Airlines and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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.| United Airlines vs. Zijin Mining Group | United Airlines vs. Highlight Communications AG | United Airlines vs. Grupo Carso SAB | United Airlines vs. GEELY AUTOMOBILE |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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