Correlation Between MagnaChip Semiconductor and Entegris

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Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Entegris 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 Entegris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and Entegris, you can compare the effects of market volatilities on MagnaChip Semiconductor and Entegris 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 Entegris. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Entegris.

Diversification Opportunities for MagnaChip Semiconductor and Entegris

-0.85
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between MagnaChip and Entegris is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Entegris go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Entegris

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Entegris. In addition to that, MagnaChip Semiconductor is 1.86 times more volatile than Entegris. It trades about -0.17 of its total potential returns per unit of risk. Entegris is currently generating about 0.15 per unit of volatility. If you would invest  13,189  in Entegris on December 29, 2023 and sell it today you would earn a total of  910.00  from holding Entegris or generate 6.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

MagnaChip Semiconductor  vs.  Entegris

 Performance 
       Timeline  
MagnaChip Semiconductor 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Entegris 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Entegris are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entegris reported solid returns over the last few months and may actually be approaching a breakup point.

MagnaChip Semiconductor and Entegris Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MagnaChip Semiconductor and Entegris

The main advantage of trading using opposite MagnaChip Semiconductor and Entegris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Entegris 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 Entegris will offset losses from the drop in Entegris' long position.
The idea behind MagnaChip Semiconductor and Entegris 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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