Correlation Between MagnaChip Semiconductor and Acm Research

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

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

Diversification Opportunities for MagnaChip Semiconductor and Acm Research

0.45

Correlation Coefficient

MagnaChip Semiconductor  Acm Research

Very weak diversification

The 3 months correlation between MagnaChip and Acm is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Acm Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Research and MagnaChip 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 MagnaChip Semiconductor are associated (or correlated) with Acm Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Research has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Acm Research go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Acm Research

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Acm Research. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 1.61 times less risky than Acm Research. The stock trades about -0.08 of its potential returns per unit of risk. The Acm Research is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,707  in Acm Research on September 23, 2024 and sell it today you would lose (216.00) from holding Acm Research or give up 12.65% of portfolio value over 90 days.

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

MagnaChip Semiconductor  vs.  Acm Research

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Acm Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acm Research has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with MagnaChip Semiconductor and Acm Research

The main advantage of trading using opposite MagnaChip Semiconductor and Acm Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Acm Research 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 Acm Research will offset losses from the drop in Acm Research's long position.

The idea behind MagnaChip Semiconductor and Acm Research 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.