Correlation Between MagnaChip Semiconductor and CanSino Biologics

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

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

Diversification Opportunities for MagnaChip Semiconductor and CanSino Biologics

-0.62

Correlation Coefficient

MagnaChip Semiconductor  CanSino Biologics

Excellent diversification

The 3 months correlation between MagnaChip and CanSino is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics 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 CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and CanSino Biologics go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and CanSino Biologics

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 0.93 times more return on investment than CanSino Biologics. However, MagnaChip Semiconductor is 1.07 times less risky than CanSino Biologics. It trades about -0.03 of its potential returns per unit of risk. CanSino Biologics is currently generating about -0.3 per unit of risk. If you would invest  413.00  in MagnaChip Semiconductor on October 11, 2024 and sell it today you would lose (10.00) from holding MagnaChip Semiconductor or give up 2.42% of portfolio value over 90 days.

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

MagnaChip Semiconductor  vs.  CanSino Biologics

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

CanSino Biologics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, CanSino Biologics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MagnaChip Semiconductor and CanSino Biologics

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

The idea behind MagnaChip Semiconductor and CanSino Biologics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.