Correlation Between MagnaChip Semiconductor and Intchains Group

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

By analyzing existing cross correlation between MagnaChip Semiconductor and Intchains Group Limited, you can compare the effects of market volatilities on MagnaChip Semiconductor and Intchains Group 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 Intchains Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Intchains Group.

Diversification Opportunities for MagnaChip Semiconductor and Intchains Group

0.15

Correlation Coefficient

MagnaChip Semiconductor  Intchains Group

Average diversification

The 3 months correlation between MagnaChip and Intchains is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Intchains Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intchains Group 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 are associated (or correlated) with Intchains Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intchains Group has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Intchains Group go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Intchains Group

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Intchains Group. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 4.58 times less risky than Intchains Group. The stock trades about -0.08 of its potential returns per unit of risk. The Intchains Group Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  878.00  in Intchains Group Limited on September 23, 2024 and sell it today you would lose (1.00) from holding Intchains Group Limited or give up 0.11% of portfolio value over 90 days.

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

MagnaChip Semiconductor  vs.  Intchains Group Limited

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 unsteady 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.

Intchains Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intchains Group Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Intchains Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MagnaChip Semiconductor and Intchains Group

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

The idea behind MagnaChip Semiconductor and Intchains Group Limited 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 Managers module to screen money managers from public funds and ETFs managed around the world.