Correlation Between Logility Supply and MagnaChip Semiconductor

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

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

Diversification Opportunities for Logility Supply and MagnaChip Semiconductor

-0.59

Correlation Coefficient

Logility Supply  MagnaChip Semiconductor

Excellent diversification

The 3 months correlation between Logility and MagnaChip is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Logility Supply Chain and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Logility Supply 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 Logility Supply Chain 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 Logility Supply i.e., Logility Supply and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between Logility Supply and MagnaChip Semiconductor

Given the investment horizon of 90 days Logility Supply Chain is expected to under-perform the MagnaChip Semiconductor. In addition to that, Logility Supply is 1.08 times more volatile than MagnaChip Semiconductor. It trades about -0.03 of its total potential returns per unit of risk. MagnaChip Semiconductor is currently generating about 0.07 per unit of volatility. If you would invest  393.00  in MagnaChip Semiconductor on October 9, 2024 and sell it today you would earn a total of  25.00  from holding MagnaChip Semiconductor or generate 6.36% return on investment over 90 days.

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

Logility Supply Chain  vs.  MagnaChip Semiconductor

Logility Supply Chain

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logility Supply Chain are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Logility Supply may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Logility Supply and MagnaChip Semiconductor

The main advantage of trading using opposite Logility Supply and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logility Supply 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 Logility Supply Chain 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.