Correlation Between Singapore Reinsurance and MagnaChip Semiconductor

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

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

Diversification Opportunities for Singapore Reinsurance and MagnaChip Semiconductor

-0.55

Correlation Coefficient

Singapore Reinsurance  MagnaChip Semiconductor

Excellent diversification

The 3 months correlation between Singapore and MagnaChip is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance i.e., Singapore Reinsurance and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between Singapore Reinsurance and MagnaChip Semiconductor

Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 0.72 times more return on investment than MagnaChip Semiconductor. However, Singapore Reinsurance is 1.38 times less risky than MagnaChip Semiconductor. It trades about 0.13 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  2,820  in Singapore Reinsurance on September 23, 2024 and sell it today you would earn a total of  560.00  from holding Singapore Reinsurance or generate 19.86% return on investment over 90 days.

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

Singapore Reinsurance  vs.  MagnaChip Semiconductor Corp

Singapore Reinsurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Singapore Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 Singapore Reinsurance and MagnaChip Semiconductor

The main advantage of trading using opposite Singapore Reinsurance and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Reinsurance 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 Singapore Reinsurance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..