Correlation Between Skywater Technology and MagnaChip Semiconductor

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

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

Diversification Opportunities for Skywater Technology and MagnaChip Semiconductor

0.73

Correlation Coefficient

Skywater Technology  MagnaChip Semiconductor

Poor diversification

The 3 months correlation between Skywater and MagnaChip is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Skywater Technology and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Skywater Technology 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 Skywater Technology are associated (or correlated) with MagnaChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MagnaChip Semiconductor has no effect on the direction of Skywater Technology i.e., Skywater Technology and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between Skywater Technology and MagnaChip Semiconductor

Given the investment horizon of 90 days Skywater Technology is expected to generate 0.83 times more return on investment than MagnaChip Semiconductor. However, Skywater Technology is 1.2 times less risky than MagnaChip Semiconductor. It trades about 0.11 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.02 per unit of risk. If you would invest  725.00  in Skywater Technology on May 7, 2025 and sell it today you would earn a total of  182.00  from holding Skywater Technology or generate 25.1% return on investment over 90 days.

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

Skywater Technology  vs.  MagnaChip Semiconductor

Skywater Technology

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Skywater Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Skywater Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

MagnaChip Semiconductor

Risk-Adjusted Performance

Weakest

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

Pair Trading with Skywater Technology and MagnaChip Semiconductor

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

The idea behind Skywater Technology and MagnaChip 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..