Correlation Between MagnaChip Semiconductor and Impinj

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

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

Diversification Opportunities for MagnaChip Semiconductor and Impinj

0.72

Correlation Coefficient

MagnaChip Semiconductor  Impinj

Poor diversification

The 3 months correlation between MagnaChip and Impinj is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Impinj Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impinj Inc 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 Impinj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impinj Inc has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Impinj go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Impinj

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 0.91 times more return on investment than Impinj. However, MagnaChip Semiconductor is 1.1 times less risky than Impinj. It trades about 0.02 of its potential returns per unit of risk. Impinj Inc is currently generating about -0.38 per unit of risk. If you would invest  386.00  in MagnaChip Semiconductor on September 23, 2024 and sell it today you would earn a total of  1.00  from holding MagnaChip Semiconductor or generate 0.26% return on investment over 90 days.

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

MagnaChip Semiconductor  vs.  Impinj Inc

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.

Impinj Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impinj Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with MagnaChip Semiconductor and Impinj

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

The idea behind MagnaChip Semiconductor and Impinj Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.