Correlation Between Micron Technology and Asia Medical

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Can any of the company-specific risk be diversified away by investing in both Micron Technology and Asia Medical 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 Asia Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Asia Medical Agricultural, you can compare the effects of market volatilities on Micron Technology and Asia Medical 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 Asia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Asia Medical.

Diversification Opportunities for Micron Technology and Asia Medical

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Micron and Asia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Asia Medical Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Medical Agricultural 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 Asia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Medical Agricultural has no effect on the direction of Micron Technology i.e., Micron Technology and Asia Medical go up and down completely randomly.

Pair Corralation between Micron Technology and Asia Medical

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.39 times more return on investment than Asia Medical. However, Micron Technology is 1.39 times more volatile than Asia Medical Agricultural. It trades about 0.1 of its potential returns per unit of risk. Asia Medical Agricultural is currently generating about -0.01 per unit of risk. If you would invest  8,708  in Micron Technology on September 15, 2024 and sell it today you would earn a total of  1,542  from holding Micron Technology or generate 17.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.31%
ValuesDaily Returns

Micron Technology  vs.  Asia Medical Agricultural

 Performance 
       Timeline  
Micron Technology 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.
Asia Medical Agricultural 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Asia Medical Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asia Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Micron Technology and Asia Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and Asia Medical

The main advantage of trading using opposite Micron Technology and Asia Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Asia Medical 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 Asia Medical will offset losses from the drop in Asia Medical's long position.
The idea behind Micron Technology and Asia Medical Agricultural 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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