Correlation Between Micron Technology and ST Dupont

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

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

Diversification Opportunities for Micron Technology and ST Dupont

-0.04

Correlation Coefficient

Micron Technology  ST Dupont

Good diversification

The 3 months correlation between Micron and DPT is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and ST Dupont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Dupont 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 ST Dupont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Dupont has no effect on the direction of Micron Technology i.e., Micron Technology and ST Dupont go up and down completely randomly.

Pair Corralation between Micron Technology and ST Dupont

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.72 times more return on investment than ST Dupont. However, Micron Technology is 1.39 times less risky than ST Dupont. It trades about 0.05 of its potential returns per unit of risk. ST Dupont is currently generating about -0.01 per unit of risk. If you would invest  5,581  in Micron Technology on September 29, 2024 and sell it today you would earn a total of  3,282  from holding Micron Technology or generate 58.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Micron Technology  vs.  ST Dupont

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ST Dupont

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ST Dupont are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ST Dupont sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and ST Dupont

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

The idea behind Micron Technology and ST Dupont 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.