Correlation Between Micron Technology and Celltrion Pharm

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

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

Diversification Opportunities for Micron Technology and Celltrion Pharm

0.03

Correlation Coefficient

Micron Technology  Celltrion Pharm

Significant diversification

The 3 months correlation between Micron and Celltrion is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Celltrion Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion Pharm and Micron 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 Micron Technology are associated (or correlated) with Celltrion Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion Pharm has no effect on the direction of Micron Technology i.e., Micron Technology and Celltrion Pharm go up and down completely randomly.

Pair Corralation between Micron Technology and Celltrion Pharm

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Celltrion Pharm. In addition to that, Micron Technology is 1.12 times more volatile than Celltrion Pharm. It trades about -0.08 of its total potential returns per unit of risk. Celltrion Pharm is currently generating about -0.05 per unit of volatility. If you would invest  7,080,000  in Celltrion Pharm on September 26, 2024 and sell it today you would lose (840,000) from holding Celltrion Pharm or give up 11.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Micron Technology  vs.  Celltrion Pharm

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Celltrion Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celltrion Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Micron Technology and Celltrion Pharm

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

The idea behind Micron Technology and Celltrion Pharm 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.