Correlation Between MagnaChip Semiconductor and Allient

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

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

Diversification Opportunities for MagnaChip Semiconductor and Allient

0.6

Correlation Coefficient

MagnaChip Semiconductor  Allient

Poor diversification

The 3 months correlation between MagnaChip and Allient is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Allient go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Allient

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Allient. In addition to that, MagnaChip Semiconductor is 1.1 times more volatile than Allient. It trades about -0.02 of its total potential returns per unit of risk. Allient is currently generating about 0.0 per unit of volatility. If you would invest  2,398  in Allient on December 29, 2024 and sell it today you would lose (71.00) from holding Allient or give up 2.96% of portfolio value over 90 days.

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

MagnaChip Semiconductor  vs.  Allient

MagnaChip Semiconductor

Risk-Adjusted Performance

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 fairly strong basic indicators, MagnaChip Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allient

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allient is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MagnaChip Semiconductor and Allient

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

The idea behind MagnaChip Semiconductor and Allient 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.