Correlation Between TRADEGATE and MagnaChip Semiconductor

Can any of the company-specific risk be diversified away by investing in both TRADEGATE and MagnaChip Semiconductor 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 TRADEGATE and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRADEGATE and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on TRADEGATE and MagnaChip Semiconductor 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 TRADEGATE with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and MagnaChip Semiconductor.

Diversification Opportunities for TRADEGATE and MagnaChip Semiconductor

-0.35

Correlation Coefficient

TRADEGATE  MagnaChip Semiconductor

Very good diversification

The 3 months correlation between TRADEGATE and MagnaChip is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and TRADEGATE 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 TRADEGATE are associated (or correlated) with MagnaChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MagnaChip Semiconductor has no effect on the direction of TRADEGATE i.e., TRADEGATE and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between TRADEGATE and MagnaChip Semiconductor

Assuming the 90 days trading horizon TRADEGATE is expected to generate 0.08 times more return on investment than MagnaChip Semiconductor. However, TRADEGATE is 12.39 times less risky than MagnaChip Semiconductor. It trades about 0.0 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.05 per unit of risk. If you would invest  9,000  in TRADEGATE on September 23, 2024 and sell it today you would earn a total of  0.00  from holding TRADEGATE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TRADEGATE  vs.  MagnaChip Semiconductor Corp

TRADEGATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRADEGATE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 uncertain 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.

Pair Trading with TRADEGATE and MagnaChip Semiconductor

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

The idea behind TRADEGATE and MagnaChip Semiconductor Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.