Correlation Between MagnaChip Semiconductor and Delta Electronics

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

Diversification Opportunities for MagnaChip Semiconductor and Delta Electronics

-0.65

Correlation Coefficient

MagnaChip Semiconductor  Delta Electronics

Excellent diversification

The 3 months correlation between MagnaChip and Delta is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Delta Electronics go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Delta Electronics

Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the Delta Electronics. In addition to that, MagnaChip Semiconductor is 1.1 times more volatile than Delta Electronics Public. It trades about -0.02 of its total potential returns per unit of risk. Delta Electronics Public is currently generating about 0.24 per unit of volatility. If you would invest  276.00  in Delta Electronics Public on September 12, 2024 and sell it today you would earn a total of  142.00  from holding Delta Electronics Public or generate 51.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

MagnaChip Semiconductor Corp  vs.  Delta Electronics Public

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 comparatively stable basic indicators, MagnaChip Semiconductor is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Delta Electronics Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MagnaChip Semiconductor and Delta Electronics

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

The idea behind MagnaChip Semiconductor Corp and Delta Electronics Public 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.