Correlation Between EBRO FOODS and MagnaChip Semiconductor

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Can any of the company-specific risk be diversified away by investing in both EBRO FOODS 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 EBRO FOODS and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on EBRO FOODS 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 EBRO FOODS with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and MagnaChip Semiconductor.

Diversification Opportunities for EBRO FOODS and MagnaChip Semiconductor

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between EBRO and MagnaChip is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS i.e., EBRO FOODS and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between EBRO FOODS and MagnaChip Semiconductor

Assuming the 90 days trading horizon EBRO FOODS is expected to generate 0.24 times more return on investment than MagnaChip Semiconductor. However, EBRO FOODS is 4.14 times less risky than MagnaChip Semiconductor. It trades about 0.03 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.03 per unit of risk. If you would invest  1,560  in EBRO FOODS on September 18, 2024 and sell it today you would earn a total of  24.00  from holding EBRO FOODS or generate 1.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

EBRO FOODS  vs.  MagnaChip Semiconductor Corp

 Performance 
       Timeline  
EBRO FOODS 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in EBRO FOODS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EBRO FOODS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
MagnaChip Semiconductor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

EBRO FOODS and MagnaChip Semiconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EBRO FOODS and MagnaChip Semiconductor

The main advantage of trading using opposite EBRO FOODS and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS 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 EBRO FOODS 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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