Different measurement methods are known using a magnetic field as a carrier of the measurement information between physical value and sensor. These contactless principles allow a separate encapsulation of all rotating components making such systems robust with respect to pollution and mechanical destruction. Among this class of systems, those based on the magnetoresistive effect (MR effect) are characterized by the additional feature that they evaluate the direction of the magnetic field and not the field strength. The field strength itself is not important as long as it is above a certain limit. Therefore MR based systems tolerate variations in field strength caused by ageing or temperature-sensitivity of the magnet as well as mechanical tolerances. A new two-chip solution provides an easy and cost-efficient method for building up an application-specific MR angle measurement system. Its performance is analyzed comprehensively. A step by step method is given to calculate the achievable accuracy for a given set of system constraints.