Correlation Between Magnachip Semiconductor and SEALED AIR

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

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

Diversification Opportunities for Magnachip Semiconductor and SEALED AIR

-0.29

Correlation Coefficient

Magnachip Semiconductor  SEALED AIR

Very good diversification

The 3 months correlation between Magnachip and SEALED is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and SEALED AIR go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and SEALED AIR

Assuming the 90 days horizon Magnachip Semiconductor is expected to under-perform the SEALED AIR. In addition to that, Magnachip Semiconductor is 1.25 times more volatile than SEALED AIR . It trades about -0.04 of its total potential returns per unit of risk. SEALED AIR is currently generating about -0.02 per unit of volatility. If you would invest  4,606  in SEALED AIR on September 5, 2024 and sell it today you would lose (1,146) from holding SEALED AIR or give up 24.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Magnachip Semiconductor  vs.  SEALED AIR

Magnachip Semiconductor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magnachip Semiconductor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magnachip Semiconductor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SEALED AIR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SEALED AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnachip Semiconductor and SEALED AIR

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

The idea behind Magnachip Semiconductor and SEALED AIR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.