Correlation Between MagnaChip Semiconductor and HONEYWELL

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

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

Diversification Opportunities for MagnaChip Semiconductor and HONEYWELL

0.05

Correlation Coefficient

MagnaChip Semiconductor  HONEYWELL

Significant diversification

The 3 months correlation between MagnaChip and HONEYWELL is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and HONEYWELL INTL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTL 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 HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTL INC has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and HONEYWELL go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and HONEYWELL

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the HONEYWELL. In addition to that, MagnaChip Semiconductor is 1.41 times more volatile than HONEYWELL INTL INC. It trades about -0.01 of its total potential returns per unit of risk. HONEYWELL INTL INC is currently generating about 0.15 per unit of volatility. If you would invest  10,127  in HONEYWELL INTL INC on October 15, 2024 and sell it today you would earn a total of  382.00  from holding HONEYWELL INTL INC or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

MagnaChip Semiconductor  vs.  HONEYWELL INTL 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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HONEYWELL INTL INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTL INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HONEYWELL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MagnaChip Semiconductor and HONEYWELL

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

The idea behind MagnaChip Semiconductor and HONEYWELL INTL 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.