Correlation Between NESNVX and MagnaChip Semiconductor

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

By analyzing existing cross correlation between NESNVX 425 01 OCT 29 and MagnaChip Semiconductor, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and MagnaChip Semiconductor.

Diversification Opportunities for NESNVX and MagnaChip Semiconductor

-0.82

Correlation Coefficient

NESNVX  MagnaChip Semiconductor

Pay attention - limited upside

The 3 months correlation between NESNVX and MagnaChip is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 425 01 OCT 29 and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and NESNVX 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 NESNVX 425 01 OCT 29 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 NESNVX i.e., NESNVX and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between NESNVX and MagnaChip Semiconductor

Assuming the 90 days trading horizon NESNVX 425 01 OCT 29 is expected to generate 0.24 times more return on investment than MagnaChip Semiconductor. However, NESNVX 425 01 OCT 29 is 4.11 times less risky than MagnaChip Semiconductor. It trades about 0.12 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about 0.02 per unit of risk. If you would invest  9,888  in NESNVX 425 01 OCT 29 on September 27, 2024 and sell it today you would earn a total of  72.00  from holding NESNVX 425 01 OCT 29 or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	40.91%
Values	Daily Returns

NESNVX 425 01 OCT 29  vs.  MagnaChip Semiconductor

NESNVX 425 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 425 01 OCT 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The current 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NESNVX and MagnaChip Semiconductor

The main advantage of trading using opposite NESNVX and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 425 01 OCT 29 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.