Correlation Between Macronix International and Everlight Electronics

Can any of the company-specific risk be diversified away by investing in both Macronix International and Everlight Electronics 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 Macronix International and Everlight Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Macronix International Co and Everlight Electronics Co, you can compare the effects of market volatilities on Macronix International and Everlight Electronics 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 Macronix International with a short position of Everlight Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macronix International and Everlight Electronics.

Diversification Opportunities for Macronix International and Everlight Electronics

-0.12

Correlation Coefficient

Macronix International  Everlight Electronics

Good diversification

The 3 months correlation between Macronix and Everlight is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Macronix International Co and Everlight Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Electronics and Macronix International 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 Macronix International Co are associated (or correlated) with Everlight Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Electronics has no effect on the direction of Macronix International i.e., Macronix International and Everlight Electronics go up and down completely randomly.

Pair Corralation between Macronix International and Everlight Electronics

Assuming the 90 days trading horizon Macronix International Co is expected to under-perform the Everlight Electronics. In addition to that, Macronix International is 1.07 times more volatile than Everlight Electronics Co. It trades about -0.18 of its total potential returns per unit of risk. Everlight Electronics Co is currently generating about 0.02 per unit of volatility. If you would invest  8,070  in Everlight Electronics Co on September 15, 2024 and sell it today you would earn a total of  80.00  from holding Everlight Electronics Co or generate 0.99% return on investment over 90 days.

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

Macronix International Co  vs.  Everlight Electronics Co

Macronix International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macronix International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Everlight Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everlight Electronics Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Everlight Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Macronix International and Everlight Electronics

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

The idea behind Macronix International Co and Everlight Electronics Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.