Correlation Between Magnachip Semiconductor and NIGHTINGALE HEALTH

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

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

Diversification Opportunities for Magnachip Semiconductor and NIGHTINGALE HEALTH

-0.11

Correlation Coefficient

Magnachip Semiconductor  NIGHTINGALE HEALTH

Good diversification

The 3 months correlation between Magnachip and NIGHTINGALE is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and NIGHTINGALE HEALTH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGHTINGALE HEALTH has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and NIGHTINGALE HEALTH go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and NIGHTINGALE HEALTH

Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 1.0 times more return on investment than NIGHTINGALE HEALTH. However, Magnachip Semiconductor is 1.0 times less risky than NIGHTINGALE HEALTH. It trades about 0.12 of its potential returns per unit of risk. NIGHTINGALE HEALTH EO is currently generating about -0.07 per unit of risk. If you would invest  354.00  in Magnachip Semiconductor on October 6, 2024 and sell it today you would earn a total of  50.00  from holding Magnachip Semiconductor or generate 14.12% return on investment over 90 days.

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

Magnachip Semiconductor  vs.  NIGHTINGALE HEALTH EO

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. Despite nearly stable basic indicators, Magnachip Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NIGHTINGALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIGHTINGALE HEALTH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Magnachip Semiconductor and NIGHTINGALE HEALTH

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

The idea behind Magnachip Semiconductor and NIGHTINGALE HEALTH EO 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.