Correlation Between Magnachip Semiconductor and BROADWIND ENRGY

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

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

Diversification Opportunities for Magnachip Semiconductor and BROADWIND ENRGY

-0.48

Correlation Coefficient

Magnachip Semiconductor  BROADWIND ENRGY

Very good diversification

The 3 months correlation between Magnachip and BROADWIND is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and BROADWIND ENRGY go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and BROADWIND ENRGY

Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 0.94 times more return on investment than BROADWIND ENRGY. However, Magnachip Semiconductor is 1.07 times less risky than BROADWIND ENRGY. It trades about 0.02 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.07 per unit of risk. If you would invest  430.00  in Magnachip Semiconductor on December 4, 2024 and sell it today you would earn a total of  4.00  from holding Magnachip Semiconductor or generate 0.93% return on investment over 90 days.

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

Magnachip Semiconductor  vs.  BROADWIND ENRGY

Magnachip Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magnachip Semiconductor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

BROADWIND ENRGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days BROADWIND ENRGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Magnachip Semiconductor and BROADWIND ENRGY

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

The idea behind Magnachip Semiconductor and BROADWIND ENRGY 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.