Correlation Between MagnaChip Semiconductor and Pixelworks

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Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Pixelworks 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 Pixelworks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and Pixelworks, you can compare the effects of market volatilities on MagnaChip Semiconductor and Pixelworks 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 Pixelworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Pixelworks.

Diversification Opportunities for MagnaChip Semiconductor and Pixelworks

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between MagnaChip and Pixelworks is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Pixelworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pixelworks 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 Pixelworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pixelworks has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Pixelworks go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Pixelworks

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 0.74 times more return on investment than Pixelworks. However, MagnaChip Semiconductor is 1.35 times less risky than Pixelworks. It trades about -0.05 of its potential returns per unit of risk. Pixelworks is currently generating about -0.13 per unit of risk. If you would invest  399.00  in MagnaChip Semiconductor on September 26, 2024 and sell it today you would lose (13.00) from holding MagnaChip Semiconductor or give up 3.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

MagnaChip Semiconductor  vs.  Pixelworks

 Performance 
       Timeline  
MagnaChip Semiconductor 

Risk-Adjusted Performance

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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.
Pixelworks 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Pixelworks are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Pixelworks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MagnaChip Semiconductor and Pixelworks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MagnaChip Semiconductor and Pixelworks

The main advantage of trading using opposite MagnaChip Semiconductor and Pixelworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Pixelworks 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 Pixelworks will offset losses from the drop in Pixelworks' long position.
The idea behind MagnaChip Semiconductor and Pixelworks 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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