Correlation Between VITA 34 and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both VITA 34 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 VITA 34 and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VITA 34 AG and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on VITA 34 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 VITA 34 with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of VITA 34 and MagnaChip Semiconductor.
Diversification Opportunities for VITA 34 and MagnaChip Semiconductor
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VITA and MagnaChip is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VITA 34 AG and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and VITA 34 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 VITA 34 AG 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 VITA 34 i.e., VITA 34 and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between VITA 34 and MagnaChip Semiconductor
Assuming the 90 days trading horizon VITA 34 AG is expected to generate 0.89 times more return on investment than MagnaChip Semiconductor. However, VITA 34 AG is 1.12 times less risky than MagnaChip Semiconductor. It trades about -0.01 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.05 per unit of risk. If you would invest 458.00 in VITA 34 AG on September 4, 2024 and sell it today you would lose (46.00) from holding VITA 34 AG or give up 10.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.24% |
| Values | Daily Returns |
VITA 34 AG vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| VITA 34 AG |
| MagnaChip Semiconductor |
VITA 34 and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VITA 34 and MagnaChip Semiconductor
The main advantage of trading using opposite VITA 34 and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VITA 34 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.| VITA 34 vs. THAI BEVERAGE | VITA 34 vs. KIMBALL ELECTRONICS | VITA 34 vs. Thai Beverage Public | VITA 34 vs. Benchmark Electronics |
| MagnaChip Semiconductor vs. VIRGIN WINES UK | MagnaChip Semiconductor vs. CHINA TONTINE WINES | MagnaChip Semiconductor vs. TROPHY GAMES DEV | MagnaChip Semiconductor vs. NAKED WINES PLC |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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