Correlation Between MagnaChip Semiconductor and Planet Fitness

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

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

Diversification Opportunities for MagnaChip Semiconductor and Planet Fitness

-0.7

Correlation Coefficient

MagnaChip Semiconductor  Planet Fitness

Excellent diversification

The 3 months correlation between MagnaChip and Planet is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness 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 Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Planet Fitness go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Planet Fitness

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 2.18 times more return on investment than Planet Fitness. However, MagnaChip Semiconductor is 2.18 times more volatile than Planet Fitness. It trades about 0.07 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.05 per unit of risk. If you would invest  365.00  in MagnaChip Semiconductor on September 20, 2024 and sell it today you would earn a total of  12.00  from holding MagnaChip Semiconductor or generate 3.29% 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.  Planet Fitness

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Planet Fitness

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MagnaChip Semiconductor and Planet Fitness

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

The idea behind MagnaChip Semiconductor and Planet Fitness 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.