Correlation Between MagnaChip Semiconductor and SYSCO

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

By analyzing existing cross correlation between MagnaChip Semiconductor and SYSCO P 5375, you can compare the effects of market volatilities on MagnaChip Semiconductor and SYSCO 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 SYSCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and SYSCO.

Diversification Opportunities for MagnaChip Semiconductor and SYSCO

0.73

Correlation Coefficient

MagnaChip Semiconductor  SYSCO

Poor diversification

The 3 months correlation between MagnaChip and SYSCO is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and SYSCO P 5375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSCO P 5375 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 SYSCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSCO P 5375 has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and SYSCO go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and SYSCO

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the SYSCO. In addition to that, MagnaChip Semiconductor is 2.44 times more volatile than SYSCO P 5375. It trades about -0.06 of its total potential returns per unit of risk. SYSCO P 5375 is currently generating about -0.14 per unit of volatility. If you would invest  10,592  in SYSCO P 5375 on September 13, 2024 and sell it today you would lose (796.00) from holding SYSCO P 5375 or give up 7.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.43%
Values	Daily Returns

MagnaChip Semiconductor  vs.  SYSCO P 5375

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.

SYSCO P 5375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SYSCO P 5375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SYSCO P 5375 investors.

Pair Trading with MagnaChip Semiconductor and SYSCO

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

The idea behind MagnaChip Semiconductor and SYSCO P 5375 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.