Correlation Between MagnaChip Semiconductor and BROADWIND ENRGY

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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 Corp 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

MagnaChipBROADWINDDiversified AwayMagnaChipBROADWINDDiversified Away100%
0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between MagnaChip and BROADWIND is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp 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 Corp 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 trading horizon MagnaChip Semiconductor Corp is expected to generate 0.8 times more return on investment than BROADWIND ENRGY. However, MagnaChip Semiconductor Corp is 1.26 times less risky than BROADWIND ENRGY. It trades about -0.03 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.03 per unit of risk. If you would invest  412.00  in MagnaChip Semiconductor Corp on September 15, 2024 and sell it today you would lose (34.00) from holding MagnaChip Semiconductor Corp or give up 8.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

MagnaChip Semiconductor Corp  vs.  BROADWIND ENRGY

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -25-20-15-10-505
JavaScript chart by amCharts 3.21.15SMG 9IRA
       Timeline  
MagnaChip Semiconductor 

Risk-Adjusted Performance

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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 comparatively stable basic indicators, MagnaChip Semiconductor is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec3.43.63.844.24.4
BROADWIND ENRGY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest uncertain 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.51.61.71.81.92

MagnaChip Semiconductor and BROADWIND ENRGY Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.14-3.85-2.56-1.270.01.232.473.74.94 0.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15SMG 9IRA
       Returns  

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 Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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