Correlation Between Intel and Magnachip Semiconductor

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

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

Diversification Opportunities for Intel and Magnachip Semiconductor

-0.49

Correlation Coefficient

Intel  Magnachip Semiconductor

Very good diversification

The 3 months correlation between Intel and Magnachip is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Intel 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 Intel 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 Intel i.e., Intel and Magnachip Semiconductor go up and down completely randomly.

Pair Corralation between Intel and Magnachip Semiconductor

Assuming the 90 days horizon Intel is expected to generate 0.91 times more return on investment than Magnachip Semiconductor. However, Intel is 1.1 times less risky than Magnachip Semiconductor. It trades about 0.09 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.03 per unit of risk. If you would invest  1,975  in Intel on September 2, 2024 and sell it today you would earn a total of  291.00  from holding Intel or generate 14.73% return on investment over 90 days.

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

Intel  vs.  Magnachip Semiconductor

Intel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Intel reported solid returns over the last few months and may actually be approaching a breakup point.

Magnachip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magnachip Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Magnachip Semiconductor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intel and Magnachip Semiconductor

The main advantage of trading using opposite Intel and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.