Correlation Between MagnaChip Semiconductor and Analog Devices
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Analog Devices 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 MagnaChip Semiconductor and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and Analog Devices, you can compare the effects of market volatilities on MagnaChip Semiconductor and Analog Devices 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 MagnaChip Semiconductor with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Analog Devices.
Diversification Opportunities for MagnaChip Semiconductor and Analog Devices
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between MagnaChip and Analog is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and MagnaChip Semiconductor 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 MagnaChip Semiconductor are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Analog Devices go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Analog Devices
Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Analog Devices. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 1.48 times less risky than Analog Devices. The stock trades about -0.47 of its potential returns per unit of risk. The Analog Devices is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 18,896 in Analog Devices on January 26, 2024 and sell it today you would earn a total of 754.00 from holding Analog Devices or generate 3.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
MagnaChip Semiconductor vs. Analog Devices
Performance |
Timeline |
MagnaChip Semiconductor |
Analog Devices |
MagnaChip Semiconductor and Analog Devices Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MagnaChip Semiconductor and Analog Devices
The main advantage of trading using opposite MagnaChip Semiconductor and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.MagnaChip Semiconductor vs. Sunrun Inc | MagnaChip Semiconductor vs. Canadian Solar | MagnaChip Semiconductor vs. SolarEdge Technologies | MagnaChip Semiconductor vs. Sunnova Energy International |
Analog Devices vs. Sunrun Inc | Analog Devices vs. Canadian Solar | Analog Devices vs. SolarEdge Technologies | Analog Devices vs. Sunnova Energy International |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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