Correlation Between Nanjing Panda and Magnachip Semiconductor

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

By analyzing existing cross correlation between Nanjing Panda Electronics and Magnachip Semiconductor, you can compare the effects of market volatilities on Nanjing Panda and Magnachip Semiconductor 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 Nanjing Panda with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Panda and Magnachip Semiconductor.

Diversification Opportunities for Nanjing Panda and Magnachip Semiconductor

0.0

Correlation Coefficient

Nanjing Panda  Magnachip Semiconductor

Pay attention - limited upside

The 3 months correlation between Nanjing and Magnachip is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Nanjing Panda 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 Nanjing Panda Electronics are associated (or correlated) with Magnachip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnachip Semiconductor has no effect on the direction of Nanjing Panda i.e., Nanjing Panda and Magnachip Semiconductor go up and down completely randomly.

Pair Corralation between Nanjing Panda and Magnachip Semiconductor

If you would invest  370.00  in Magnachip Semiconductor on December 21, 2024 and sell it today you would lose (4.00) from holding Magnachip Semiconductor or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Nanjing Panda Electronics  vs.  Magnachip Semiconductor

Nanjing Panda Electronics

Risk-Adjusted Performance

Very Weak

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

Magnachip Semiconductor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nanjing Panda and Magnachip Semiconductor

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

The idea behind Nanjing Panda Electronics and Magnachip Semiconductor 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.