Correlation Between China Eastern and MagnaChip Semiconductor

Can any of the company-specific risk be diversified away by investing in both China Eastern 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 China Eastern and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Eastern Airlines and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on China Eastern 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 China Eastern with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and MagnaChip Semiconductor.

Diversification Opportunities for China Eastern and MagnaChip Semiconductor

0.68

Correlation Coefficient

China Eastern  MagnaChip Semiconductor

Poor diversification

The 3 months correlation between China and MagnaChip is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and China Eastern 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 China Eastern Airlines 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 China Eastern i.e., China Eastern and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between China Eastern and MagnaChip Semiconductor

Assuming the 90 days trading horizon China Eastern is expected to generate 1.54 times less return on investment than MagnaChip Semiconductor. But when comparing it to its historical volatility, China Eastern Airlines is 1.09 times less risky than MagnaChip Semiconductor. It trades about 0.08 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  282.00  in MagnaChip Semiconductor Corp on April 25, 2025 and sell it today you would earn a total of  74.00  from holding MagnaChip Semiconductor Corp or generate 26.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

China Eastern Airlines  vs.  MagnaChip Semiconductor Corp

China Eastern Airlines

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Eastern Airlines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Eastern reported solid returns over the last few months and may actually be approaching a breakup point.

MagnaChip Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MagnaChip Semiconductor Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MagnaChip Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Eastern and MagnaChip Semiconductor

The main advantage of trading using opposite China Eastern and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern 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.

The idea behind China Eastern Airlines and MagnaChip Semiconductor Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Global Correlations module to find global opportunities by holding instruments from different markets.