Correlation Between Magnachip Semiconductor and Marubeni

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

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

Diversification Opportunities for Magnachip Semiconductor and Marubeni

0.62

Correlation Coefficient

Magnachip Semiconductor  Marubeni

Poor diversification

The 3 months correlation between Magnachip and Marubeni is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni 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 Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and Marubeni go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and Marubeni

Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 1.35 times less return on investment than Marubeni. In addition to that, Magnachip Semiconductor is 1.85 times more volatile than Marubeni. It trades about 0.03 of its total potential returns per unit of risk. Marubeni is currently generating about 0.07 per unit of volatility. If you would invest  1,435  in Marubeni on December 2, 2024 and sell it today you would earn a total of  102.00  from holding Marubeni or generate 7.11% return on investment over 90 days.

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

Magnachip Semiconductor  vs.  Marubeni

Magnachip Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magnachip Semiconductor are ranked lower than 2 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Marubeni

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marubeni are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Marubeni may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Magnachip Semiconductor and Marubeni

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

The idea behind Magnachip Semiconductor and Marubeni 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..