Correlation Between Magnachip Semiconductor and Haier Smart

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

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

Diversification Opportunities for Magnachip Semiconductor and Haier Smart

0.07

Correlation Coefficient

Magnachip Semiconductor  Haier Smart

Significant diversification

The 3 months correlation between Magnachip and Haier is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and Haier Smart go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and Haier Smart

Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 23.24 times less return on investment than Haier Smart. In addition to that, Magnachip Semiconductor is 1.44 times more volatile than Haier Smart Home. It trades about 0.0 of its total potential returns per unit of risk. Haier Smart Home is currently generating about 0.15 per unit of volatility. If you would invest  143.00  in Haier Smart Home on September 12, 2024 and sell it today you would earn a total of  31.00  from holding Haier Smart Home or generate 21.68% return on investment over 90 days.

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

Magnachip Semiconductor  vs.  Haier Smart Home

Magnachip Semiconductor

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Haier Smart Home

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haier Smart Home are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Haier Smart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnachip Semiconductor and Haier Smart

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

The idea behind Magnachip Semiconductor and Haier Smart Home 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.