Correlation Between MagnaChip Semiconductor and Marex Group

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

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

Diversification Opportunities for MagnaChip Semiconductor and Marex Group

-0.66

Correlation Coefficient

MagnaChip Semiconductor  Marex Group

Excellent diversification

The 3 months correlation between MagnaChip and Marex is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc 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 Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Marex Group go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Marex Group

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 4.3 times less return on investment than Marex Group. In addition to that, MagnaChip Semiconductor is 1.49 times more volatile than Marex Group plc. It trades about 0.04 of its total potential returns per unit of risk. Marex Group plc is currently generating about 0.27 per unit of volatility. If you would invest  2,712  in Marex Group plc on October 6, 2024 and sell it today you would earn a total of  641.00  from holding Marex Group plc or generate 23.64% return on investment over 90 days.

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

MagnaChip Semiconductor  vs.  Marex Group plc

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.

Marex Group plc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MagnaChip Semiconductor and Marex Group

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

The idea behind MagnaChip Semiconductor and Marex Group plc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.