Correlation Between Zedge and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Zedge 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 Zedge and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zedge Inc and MagnaChip Semiconductor, you can compare the effects of market volatilities on Zedge 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 Zedge with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zedge and MagnaChip Semiconductor.
Diversification Opportunities for Zedge and MagnaChip Semiconductor
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zedge and MagnaChip is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Zedge 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 Zedge Inc 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 Zedge i.e., Zedge and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Zedge and MagnaChip Semiconductor
Given the investment horizon of 90 days Zedge Inc is expected to generate 2.13 times more return on investment than MagnaChip Semiconductor. However, Zedge is 2.13 times more volatile than MagnaChip Semiconductor. It trades about 0.03 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.08 per unit of risk. If you would invest 230.00 in Zedge Inc on September 12, 2024 and sell it today you would earn a total of 35.00 from holding Zedge Inc or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zedge Inc vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Zedge Inc |
| MagnaChip Semiconductor |
Zedge and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zedge and MagnaChip Semiconductor
The main advantage of trading using opposite Zedge and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zedge 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.| Zedge vs. Twilio Inc | Zedge vs. Meta Platforms | Zedge vs. Alphabet Inc Class C | Zedge vs. Alphabet Inc Class A |
| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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