Correlation Between Micron Technology and BDO Unibank

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

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

Diversification Opportunities for Micron Technology and BDO Unibank

-0.1

Correlation Coefficient

Micron Technology  BDO Unibank

Good diversification

The 3 months correlation between Micron and BDO is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and BDO Unibank ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank ADR 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 BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank ADR has no effect on the direction of Micron Technology i.e., Micron Technology and BDO Unibank go up and down completely randomly.

Pair Corralation between Micron Technology and BDO Unibank

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.63 times less return on investment than BDO Unibank. In addition to that, Micron Technology is 1.41 times more volatile than BDO Unibank ADR. It trades about 0.07 of its total potential returns per unit of risk. BDO Unibank ADR is currently generating about 0.36 per unit of volatility. If you would invest  2,293  in BDO Unibank ADR on September 15, 2024 and sell it today you would earn a total of  349.00  from holding BDO Unibank ADR or generate 15.22% 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.  BDO Unibank ADR

Micron Technology

Risk-Adjusted Performance

7 of 100

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 unfluctuating basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

BDO Unibank ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BDO Unibank ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BDO Unibank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and BDO Unibank

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

The idea behind Micron Technology and BDO Unibank ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.