Correlation Between Postal Savings and Magnachip Semiconductor

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

By analyzing existing cross correlation between Postal Savings Bank and Magnachip Semiconductor, you can compare the effects of market volatilities on Postal Savings 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 Postal Savings with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Magnachip Semiconductor.

Diversification Opportunities for Postal Savings and Magnachip Semiconductor

0.18

Correlation Coefficient

Postal Savings  Magnachip Semiconductor

Average diversification

The 3 months correlation between Postal and Magnachip is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Postal Savings 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 Postal Savings Bank 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 Postal Savings i.e., Postal Savings and Magnachip Semiconductor go up and down completely randomly.

Pair Corralation between Postal Savings and Magnachip Semiconductor

Assuming the 90 days horizon Postal Savings Bank is expected to generate 0.54 times more return on investment than Magnachip Semiconductor. However, Postal Savings Bank is 1.85 times less risky than Magnachip Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.04 per unit of risk. If you would invest  55.00  in Postal Savings Bank on December 27, 2024 and sell it today you would earn a total of  6.00  from holding Postal Savings Bank or generate 10.91% return on investment over 90 days.

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

Postal Savings Bank  vs.  Magnachip Semiconductor

Postal Savings Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Postal Savings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Magnachip Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magnachip Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Postal Savings and Magnachip Semiconductor

The main advantage of trading using opposite Postal Savings and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings 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 Postal Savings Bank and Magnachip Semiconductor 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.