Correlation Between MagnaChip Semiconductor and Cypress Semiconductor

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

Diversification Opportunities for MagnaChip Semiconductor and Cypress Semiconductor

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between MagnaChip and Cypress is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Cypress Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cypress Semiconductor 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 Cypress Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cypress Semiconductor has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Cypress Semiconductor go up and down completely randomly.

Pair Corralation between MagnaChip Semiconductor and Cypress Semiconductor

If you would invest (100.00) in Cypress Semiconductor on December 30, 2023 and sell it today you would earn a total of  100.00  from holding Cypress Semiconductor or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

MagnaChip Semiconductor  vs.  Cypress Semiconductor

 Performance 
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MagnaChip Semiconductor 

Risk-Adjusted Performance

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Over the last 90 days MagnaChip Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.
Cypress Semiconductor 

Risk-Adjusted Performance

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Over the last 90 days Cypress Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cypress Semiconductor is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MagnaChip Semiconductor and Cypress Semiconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MagnaChip Semiconductor and Cypress Semiconductor

The main advantage of trading using opposite MagnaChip Semiconductor and Cypress Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Cypress Semiconductor 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 Cypress Semiconductor will offset losses from the drop in Cypress Semiconductor's long position.
The idea behind MagnaChip Semiconductor and Cypress Semiconductor 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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