Correlation Between Reinsurance Group and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group 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 Reinsurance Group and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Reinsurance Group 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 Reinsurance Group with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and MagnaChip Semiconductor.
Diversification Opportunities for Reinsurance Group and MagnaChip Semiconductor
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reinsurance and MagnaChip is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Reinsurance Group 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 Reinsurance Group of 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 Reinsurance Group i.e., Reinsurance Group and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Reinsurance Group and MagnaChip Semiconductor
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 0.66 times more return on investment than MagnaChip Semiconductor. However, Reinsurance Group of is 1.51 times less risky than MagnaChip Semiconductor. It trades about 0.02 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.02 per unit of risk. If you would invest 19,913 in Reinsurance Group of on October 5, 2024 and sell it today you would earn a total of 287.00 from holding Reinsurance Group of or generate 1.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Reinsurance Group of vs. MagnaChip Semiconductor Corp
Performance |
Timeline |
Reinsurance Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
MagnaChip Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Reinsurance Group and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reinsurance Group and MagnaChip Semiconductor
The main advantage of trading using opposite Reinsurance Group and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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 Reinsurance Group of and MagnaChip Semiconductor Corp 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.Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |