Correlation Between Magnachip Semiconductor and SHELF DRILLING

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

By analyzing existing cross correlation between Magnachip Semiconductor and SHELF DRILLING LTD, you can compare the effects of market volatilities on Magnachip Semiconductor and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and SHELF DRILLING.

Diversification Opportunities for Magnachip Semiconductor and SHELF DRILLING

0.67

Correlation Coefficient

Magnachip Semiconductor  SHELF DRILLING

Poor diversification

The 3 months correlation between Magnachip and SHELF is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and SHELF DRILLING go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and SHELF DRILLING

Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 0.7 times more return on investment than SHELF DRILLING. However, Magnachip Semiconductor is 1.44 times less risky than SHELF DRILLING. It trades about 0.19 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about 0.13 per unit of risk. If you would invest  266.00  in Magnachip Semiconductor on April 23, 2025 and sell it today you would earn a total of  108.00  from holding Magnachip Semiconductor or generate 40.6% return on investment over 90 days.

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

Magnachip Semiconductor  vs.  SHELF DRILLING LTD

Magnachip Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magnachip Semiconductor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magnachip Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

SHELF DRILLING LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SHELF DRILLING LTD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SHELF DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnachip Semiconductor and SHELF DRILLING

The main advantage of trading using opposite Magnachip Semiconductor and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnachip Semiconductor position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.

The idea behind Magnachip Semiconductor and SHELF DRILLING LTD 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.