Correlation Between Lattice Semiconductor and MagnaChip Semiconductor

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

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

Diversification Opportunities for Lattice Semiconductor and MagnaChip Semiconductor

0.36

Correlation Coefficient

Lattice Semiconductor  MagnaChip Semiconductor

Weak diversification

The 3 months correlation between Lattice and MagnaChip is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Lattice Semiconductor 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 Lattice Semiconductor 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 Lattice Semiconductor i.e., Lattice Semiconductor and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and MagnaChip Semiconductor

Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 1.31 times more return on investment than MagnaChip Semiconductor. However, Lattice Semiconductor is 1.31 times more volatile than MagnaChip Semiconductor. It trades about 0.0 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.05 per unit of risk. If you would invest  8,496  in Lattice Semiconductor on November 19, 2024 and sell it today you would lose (2,054) from holding Lattice Semiconductor or give up 24.18% of portfolio value over 90 days.

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

Lattice Semiconductor  vs.  MagnaChip Semiconductor

Lattice Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Lattice Semiconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

MagnaChip Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MagnaChip Semiconductor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MagnaChip Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lattice Semiconductor and MagnaChip Semiconductor

The main advantage of trading using opposite Lattice Semiconductor and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lattice Semiconductor 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 Lattice Semiconductor 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.