Correlation Between MagnaChip Semiconductor and AECOM

Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and AECOM 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 AECOM 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 AECOM, you can compare the effects of market volatilities on MagnaChip Semiconductor and AECOM 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 AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and AECOM.

Diversification Opportunities for MagnaChip Semiconductor and AECOM

-0.39

Correlation Coefficient

MagnaChip Semiconductor  AECOM

Very good diversification

The 3 months correlation between MagnaChip and AECOM is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM 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 AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and AECOM go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and AECOM

Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to generate 2.61 times more return on investment than AECOM. However, MagnaChip Semiconductor is 2.61 times more volatile than AECOM. It trades about 0.04 of its potential returns per unit of risk. AECOM is currently generating about -0.18 per unit of risk. If you would invest  382.00  in MagnaChip Semiconductor Corp on October 13, 2024 and sell it today you would earn a total of  6.00  from holding MagnaChip Semiconductor Corp or generate 1.57% 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.  AECOM

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.

AECOM

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with MagnaChip Semiconductor and AECOM

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

The idea behind MagnaChip Semiconductor Corp and AECOM 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.