Correlation Between MagnaChip Semiconductor and Global Ship

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

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

Diversification Opportunities for MagnaChip Semiconductor and Global Ship

-0.31

Correlation Coefficient

MagnaChip Semiconductor  Global Ship

Very good diversification

The 3 months correlation between MagnaChip and Global is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Corp are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Global Ship go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Global Ship

Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the Global Ship. In addition to that, MagnaChip Semiconductor is 1.39 times more volatile than Global Ship Lease. It trades about -0.06 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of volatility. If you would invest  1,467  in Global Ship Lease on October 25, 2024 and sell it today you would earn a total of  575.00  from holding Global Ship Lease or generate 39.2% return on investment over 90 days.

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

MagnaChip Semiconductor Corp  vs.  Global Ship Lease

MagnaChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MagnaChip Semiconductor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Global Ship is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MagnaChip Semiconductor and Global Ship

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

The idea behind MagnaChip Semiconductor Corp and Global Ship Lease 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.