Correlation Between Micron Technology and Neotion SA

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

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

Diversification Opportunities for Micron Technology and Neotion SA

-0.06

Correlation Coefficient

Micron Technology  Neotion SA

Good diversification

The 3 months correlation between Micron and Neotion is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Neotion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neotion SA 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 Neotion SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neotion SA has no effect on the direction of Micron Technology i.e., Micron Technology and Neotion SA go up and down completely randomly.

Pair Corralation between Micron Technology and Neotion SA

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Neotion SA. In addition to that, Micron Technology is 1.05 times more volatile than Neotion SA. It trades about -0.01 of its total potential returns per unit of risk. Neotion SA is currently generating about 0.08 per unit of volatility. If you would invest  43.00  in Neotion SA on September 25, 2024 and sell it today you would earn a total of  7.00  from holding Neotion SA or generate 16.28% return on investment over 90 days.

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

Micron Technology  vs.  Neotion SA

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Neotion SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neotion SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Neotion SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Neotion SA

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

The idea behind Micron Technology and Neotion SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.