Correlation Between Micron Technology and Global PMX

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

By analyzing existing cross correlation between Micron Technology and Global PMX Co, you can compare the effects of market volatilities on Micron Technology and Global PMX 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 Global PMX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Global PMX.

Diversification Opportunities for Micron Technology and Global PMX

0.3

Correlation Coefficient

Micron Technology  Global PMX

Weak diversification

The 3 months correlation between Micron and Global is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Global PMX Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global PMX 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 Global PMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global PMX has no effect on the direction of Micron Technology i.e., Micron Technology and Global PMX go up and down completely randomly.

Pair Corralation between Micron Technology and Global PMX

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.27 times more return on investment than Global PMX. However, Micron Technology is 1.27 times more volatile than Global PMX Co. It trades about 0.0 of its potential returns per unit of risk. Global PMX Co is currently generating about -0.09 per unit of risk. If you would invest  9,346  in Micron Technology on September 23, 2024 and sell it today you would lose (334.00) from holding Micron Technology or give up 3.57% of portfolio value over 90 days.

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

Micron Technology  vs.  Global PMX Co

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Global PMX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global PMX Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Micron Technology and Global PMX

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

The idea behind Micron Technology and Global PMX Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.