Correlation Between SGH Old and MagnaChip Semiconductor

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

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

Diversification Opportunities for SGH Old and MagnaChip Semiconductor

0.0

Correlation Coefficient

SGH Old  MagnaChip Semiconductor

Pay attention - limited upside

The 3 months correlation between SGH and MagnaChip is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SGH Old and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and SGH Old 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 SGH Old 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 SGH Old i.e., SGH Old and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between SGH Old and MagnaChip Semiconductor

If you would invest (100.00) in SGH Old on December 28, 2024 and sell it today you would earn a total of  100.00  from holding SGH Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SGH Old  vs.  MagnaChip Semiconductor

SGH Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days SGH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, SGH Old is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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. 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.

Pair Trading with SGH Old and MagnaChip Semiconductor

The main advantage of trading using opposite SGH Old and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGH Old 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 SGH Old 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.