Correlation Between MagnaChip Semiconductor and WiSA Technologies

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

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

Diversification Opportunities for MagnaChip Semiconductor and WiSA Technologies

-0.24

Correlation Coefficient

MagnaChip Semiconductor  WiSA Technologies

Very good diversification

The 3 months correlation between MagnaChip and WiSA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and WiSA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiSA Technologies 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 WiSA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiSA Technologies has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and WiSA Technologies go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and WiSA Technologies

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the WiSA Technologies. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 1.54 times less risky than WiSA Technologies. The stock trades about -0.07 of its potential returns per unit of risk. The WiSA Technologies is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  196.00  in WiSA Technologies on September 24, 2024 and sell it today you would lose (26.00) from holding WiSA Technologies or give up 13.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MagnaChip Semiconductor  vs.  WiSA Technologies

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 unsteady 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.

WiSA Technologies

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days WiSA Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Pair Trading with MagnaChip Semiconductor and WiSA Technologies

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

The idea behind MagnaChip Semiconductor and WiSA Technologies 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.