Correlation Between Micron Technology and Acceleware

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

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

Diversification Opportunities for Micron Technology and Acceleware

0.35

Correlation Coefficient

Micron Technology  Acceleware

Weak diversification

The 3 months correlation between Micron and Acceleware is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Acceleware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acceleware 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 Acceleware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acceleware has no effect on the direction of Micron Technology i.e., Micron Technology and Acceleware go up and down completely randomly.

Pair Corralation between Micron Technology and Acceleware

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 214.63 times less return on investment than Acceleware. But when comparing it to its historical volatility, Micron Technology is 5.71 times less risky than Acceleware. It trades about 0.0 of its potential returns per unit of risk. Acceleware is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Acceleware on September 24, 2024 and sell it today you would earn a total of  3.50  from holding Acceleware or generate 87.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Micron Technology  vs.  Acceleware

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.

Acceleware

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acceleware are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Acceleware reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Acceleware

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

The idea behind Micron Technology and Acceleware 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.