Correlation Between Magnachip Semiconductor and KGHM Polska

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

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

Diversification Opportunities for Magnachip Semiconductor and KGHM Polska

0.64

Correlation Coefficient

Magnachip Semiconductor  KGHM Polska

Poor diversification

The 3 months correlation between Magnachip and KGHM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz 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 KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and KGHM Polska go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and KGHM Polska

Assuming the 90 days horizon Magnachip Semiconductor is expected to under-perform the KGHM Polska. In addition to that, Magnachip Semiconductor is 1.0 times more volatile than KGHM Polska Miedz. It trades about -0.06 of its total potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.18 per unit of volatility. If you would invest  2,897  in KGHM Polska Miedz on April 17, 2025 and sell it today you would earn a total of  228.00  from holding KGHM Polska Miedz or generate 7.87% 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.  KGHM Polska Miedz

Magnachip Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magnachip Semiconductor are ranked lower than 11 (%) 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.

KGHM Polska Miedz

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, KGHM Polska reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnachip Semiconductor and KGHM Polska

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

The idea behind Magnachip Semiconductor and KGHM Polska Miedz 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.