Correlation Between MagnaChip Semiconductor and Gateway Real

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

Diversification Opportunities for MagnaChip Semiconductor and Gateway Real

0.36

Correlation Coefficient

MagnaChip Semiconductor  Gateway Real

Weak diversification

The 3 months correlation between MagnaChip and Gateway is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Gateway Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Real Estate 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 Gateway Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Real Estate has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Gateway Real go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Gateway Real

Assuming the 90 days trading horizon MagnaChip Semiconductor is expected to generate 45.86 times less return on investment than Gateway Real. But when comparing it to its historical volatility, MagnaChip Semiconductor Corp is 16.77 times less risky than Gateway Real. It trades about 0.07 of its potential returns per unit of risk. Gateway Real Estate is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Gateway Real Estate on October 15, 2024 and sell it today you would earn a total of  41.00  from holding Gateway Real Estate or generate 65.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

MagnaChip Semiconductor Corp  vs.  Gateway Real Estate

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.

Gateway Real Estate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gateway Real unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MagnaChip Semiconductor and Gateway Real

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

The idea behind MagnaChip Semiconductor Corp and Gateway Real Estate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.