Correlation Between MagnaChip Semiconductor and Qingdao Port

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

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

Diversification Opportunities for MagnaChip Semiconductor and Qingdao Port

-0.51

Correlation Coefficient

MagnaChip Semiconductor  Qingdao Port

Excellent diversification

The 3 months correlation between MagnaChip and Qingdao is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and Qingdao Port International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Port Interna 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 Corp are associated (or correlated) with Qingdao Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Port Interna has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Qingdao Port go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Qingdao Port

Assuming the 90 days trading horizon MagnaChip Semiconductor Corp is expected to under-perform the Qingdao Port. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor Corp is 1.17 times less risky than Qingdao Port. The stock trades about -0.05 of its potential returns per unit of risk. The Qingdao Port International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  53.00  in Qingdao Port International on September 26, 2024 and sell it today you would earn a total of  19.00  from holding Qingdao Port International or generate 35.85% return on investment over 90 days.

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

MagnaChip Semiconductor Corp  vs.  Qingdao Port International

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.

Qingdao Port Interna

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Port International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Qingdao Port reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MagnaChip Semiconductor and Qingdao Port

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

The idea behind MagnaChip Semiconductor Corp and Qingdao Port International 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.