Correlation Between MagnaChip Semiconductor and Everspin Technologies

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

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

Diversification Opportunities for MagnaChip Semiconductor and Everspin Technologies

0.89

Correlation Coefficient

MagnaChip Semiconductor  Everspin Technologies

Very poor diversification

The 3 months correlation between MagnaChip and Everspin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Everspin Technologies go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Everspin Technologies

Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to generate 0.58 times more return on investment than Everspin Technologies. However, MagnaChip Semiconductor is 1.72 times less risky than Everspin Technologies. It trades about -0.11 of its potential returns per unit of risk. Everspin Technologies is currently generating about -0.25 per unit of risk. If you would invest  534.00  in MagnaChip Semiconductor on February 7, 2024 and sell it today you would lose (25.00) from holding MagnaChip Semiconductor or give up 4.68% of portfolio value over 90 days.

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

MagnaChip Semiconductor  vs.  Everspin Technologies

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

Everspin Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everspin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MagnaChip Semiconductor and Everspin Technologies

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

The idea behind MagnaChip Semiconductor and Everspin Technologies 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.