Correlation Between MagnaChip Semiconductor and WillScot Mobile

Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and WillScot Mobile 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 WillScot Mobile 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 WillScot Mobile Mini, you can compare the effects of market volatilities on MagnaChip Semiconductor and WillScot Mobile 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 WillScot Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and WillScot Mobile.

Diversification Opportunities for MagnaChip Semiconductor and WillScot Mobile

0.06

Correlation Coefficient

MagnaChip Semiconductor  WillScot Mobile

Significant diversification

The 3 months correlation between MagnaChip and WillScot is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor Corp and WillScot Mobile Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WillScot Mobile Mini 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 WillScot Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WillScot Mobile Mini has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and WillScot Mobile go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and WillScot Mobile

Assuming the 90 days trading horizon MagnaChip Semiconductor is expected to generate 2.54 times less return on investment than WillScot Mobile. But when comparing it to its historical volatility, MagnaChip Semiconductor Corp is 1.06 times less risky than WillScot Mobile. It trades about 0.02 of its potential returns per unit of risk. WillScot Mobile Mini is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,320  in WillScot Mobile Mini on September 5, 2024 and sell it today you would earn a total of  280.00  from holding WillScot Mobile Mini or generate 8.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

MagnaChip Semiconductor Corp  vs.  WillScot Mobile Mini

MagnaChip Semiconductor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MagnaChip Semiconductor Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

WillScot Mobile Mini

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WillScot Mobile Mini are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WillScot Mobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MagnaChip Semiconductor and WillScot Mobile

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

The idea behind MagnaChip Semiconductor Corp and WillScot Mobile Mini 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.