Correlation Between 11041RAL2 and MagnaChip Semiconductor

Can any of the company-specific risk be diversified away by investing in both 11041RAL2 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 11041RAL2 and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BALN 75 01 JUL 27 and MagnaChip Semiconductor, you can compare the effects of market volatilities on 11041RAL2 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 11041RAL2 with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of 11041RAL2 and MagnaChip Semiconductor.

Diversification Opportunities for 11041RAL2 and MagnaChip Semiconductor

-0.29

Correlation Coefficient

11041RAL2  MagnaChip Semiconductor

Very good diversification

The 3 months correlation between 11041RAL2 and MagnaChip is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BALN 75 01 JUL 27 and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and 11041RAL2 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 BALN 75 01 JUL 27 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 11041RAL2 i.e., 11041RAL2 and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between 11041RAL2 and MagnaChip Semiconductor

Assuming the 90 days trading horizon BALN 75 01 JUL 27 is expected to under-perform the MagnaChip Semiconductor. But the bond apears to be less risky and, when comparing its historical volatility, BALN 75 01 JUL 27 is 10.28 times less risky than MagnaChip Semiconductor. The bond trades about -0.65 of its potential returns per unit of risk. The MagnaChip Semiconductor is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  403.00  in MagnaChip Semiconductor on October 15, 2024 and sell it today you would lose (5.00) from holding MagnaChip Semiconductor or give up 1.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	21.05%
Values	Daily Returns

BALN 75 01 JUL 27  vs.  MagnaChip Semiconductor

BALN 75 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BALN 75 01 JUL 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 11041RAL2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MagnaChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MagnaChip Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with 11041RAL2 and MagnaChip Semiconductor

The main advantage of trading using opposite 11041RAL2 and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 11041RAL2 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 BALN 75 01 JUL 27 and MagnaChip Semiconductor 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 CEOs Directory module to screen CEOs from public companies around the world.