Correlation Between MagnaChip Semiconductor and Akamai Technologies
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Akamai Technologies 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 Akamai Technologies 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 Akamai Technologies, you can compare the effects of market volatilities on MagnaChip Semiconductor and Akamai Technologies 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 Akamai Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Akamai Technologies.
Diversification Opportunities for MagnaChip Semiconductor and Akamai Technologies
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MagnaChip and Akamai is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies 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 Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Akamai Technologies go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Akamai Technologies
Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to generate 2.38 times more return on investment than Akamai Technologies. However, MagnaChip Semiconductor is 2.38 times more volatile than Akamai Technologies. It trades about -0.06 of its potential returns per unit of risk. Akamai Technologies is currently generating about -0.18 per unit of risk. If you would invest 412.00 in MagnaChip Semiconductor Corp on October 10, 2024 and sell it today you would lose (16.00) from holding MagnaChip Semiconductor Corp or give up 3.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
MagnaChip Semiconductor Corp vs. Akamai Technologies
Performance |
Timeline |
MagnaChip Semiconductor |
Akamai Technologies |
MagnaChip Semiconductor and Akamai Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MagnaChip Semiconductor and Akamai Technologies
The main advantage of trading using opposite MagnaChip Semiconductor and Akamai Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Akamai Technologies 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 Akamai Technologies will offset losses from the drop in Akamai Technologies' long position.MagnaChip Semiconductor vs. H2O Retailing | MagnaChip Semiconductor vs. QURATE RETAIL INC | MagnaChip Semiconductor vs. Wizz Air Holdings | MagnaChip Semiconductor vs. MARKET VECTR RETAIL |
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Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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