Correlation Between Magnachip Semiconductor and Ichor Coal

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

By analyzing existing cross correlation between Magnachip Semiconductor and Ichor Coal NV, you can compare the effects of market volatilities on Magnachip Semiconductor and Ichor Coal 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 Ichor Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnachip Semiconductor and Ichor Coal.

Diversification Opportunities for Magnachip Semiconductor and Ichor Coal

0.35

Correlation Coefficient

Magnachip Semiconductor  Ichor Coal

Weak diversification

The 3 months correlation between Magnachip and Ichor is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Magnachip Semiconductor and Ichor Coal NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Coal NV 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 Ichor Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Coal NV has no effect on the direction of Magnachip Semiconductor i.e., Magnachip Semiconductor and Ichor Coal go up and down completely randomly.

Pair Corralation between Magnachip Semiconductor and Ichor Coal

Assuming the 90 days horizon Magnachip Semiconductor is expected to generate 2.05 times less return on investment than Ichor Coal. In addition to that, Magnachip Semiconductor is 1.47 times more volatile than Ichor Coal NV. It trades about 0.07 of its total potential returns per unit of risk. Ichor Coal NV is currently generating about 0.21 per unit of volatility. If you would invest  2.00  in Ichor Coal NV on September 26, 2024 and sell it today you would earn a total of  0.20  from holding Ichor Coal NV or generate 10.0% return on investment over 90 days.

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

Magnachip Semiconductor  vs.  Ichor Coal NV

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. Despite nearly stable basic indicators, Magnachip Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ichor Coal NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichor Coal NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Magnachip Semiconductor and Ichor Coal

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

The idea behind Magnachip Semiconductor and Ichor Coal NV 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.