Correlation Between MagnaChip Semiconductor and Perseus Mining

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

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

Diversification Opportunities for MagnaChip Semiconductor and Perseus Mining

0.57

Correlation Coefficient

MagnaChip Semiconductor  Perseus Mining

Very weak diversification

The 3 months correlation between MagnaChip and Perseus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Perseus Mining go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Perseus Mining

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Perseus Mining. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 1.3 times less risky than Perseus Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Perseus Mining Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Perseus Mining Limited on October 7, 2024 and sell it today you would earn a total of  11.00  from holding Perseus Mining Limited or generate 7.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.38%
Values	Daily Returns

MagnaChip Semiconductor  vs.  Perseus Mining Limited

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.

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perseus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MagnaChip Semiconductor and Perseus Mining

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

The idea behind MagnaChip Semiconductor and Perseus Mining Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.