Correlation Between Dentsply Sirona and MagnaChip Semiconductor

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

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

Diversification Opportunities for Dentsply Sirona and MagnaChip Semiconductor

0.66

Correlation Coefficient

Dentsply Sirona  MagnaChip Semiconductor

Poor diversification

The 3 months correlation between Dentsply and MagnaChip is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona i.e., Dentsply Sirona and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between Dentsply Sirona and MagnaChip Semiconductor

Assuming the 90 days horizon Dentsply Sirona is expected to under-perform the MagnaChip Semiconductor. In addition to that, Dentsply Sirona is 1.13 times more volatile than MagnaChip Semiconductor Corp. It trades about -0.06 of its total potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.03 per unit of volatility. If you would invest  438.00  in MagnaChip Semiconductor Corp on October 23, 2024 and sell it today you would lose (42.00) from holding MagnaChip Semiconductor Corp or give up 9.59% of portfolio value over 90 days.

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

Dentsply Sirona  vs.  MagnaChip Semiconductor Corp

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MagnaChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MagnaChip Semiconductor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Dentsply Sirona and MagnaChip Semiconductor

The main advantage of trading using opposite Dentsply Sirona and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona 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 Dentsply Sirona and MagnaChip Semiconductor Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.