Correlation Between MagnaChip Semiconductor and BANK MANDIRI

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

Diversification Opportunities for MagnaChip Semiconductor and BANK MANDIRI

0.63

Correlation Coefficient

MagnaChip Semiconductor  BANK MANDIRI

Poor diversification

The 3 months correlation between MagnaChip and BANK is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI 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 BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and BANK MANDIRI go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and BANK MANDIRI

Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the BANK MANDIRI. In addition to that, MagnaChip Semiconductor is 1.12 times more volatile than BANK MANDIRI. It trades about -0.06 of its total potential returns per unit of risk. BANK MANDIRI is currently generating about 0.0 per unit of volatility. If you would invest  34.00  in BANK MANDIRI on October 6, 2024 and sell it today you would lose (2.00) from holding BANK MANDIRI or give up 5.88% 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.  BANK MANDIRI

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.

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MagnaChip Semiconductor and BANK MANDIRI

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

The idea behind MagnaChip Semiconductor Corp and BANK MANDIRI 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.