Correlation Between Micron Technology and MULTI CHEM

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

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

Diversification Opportunities for Micron Technology and MULTI CHEM

-0.01

Correlation Coefficient

Micron Technology  MULTI CHEM

Good diversification

The 3 months correlation between Micron and MULTI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and MULTI CHEM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI CHEM LTD 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 MULTI CHEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI CHEM LTD has no effect on the direction of Micron Technology i.e., Micron Technology and MULTI CHEM go up and down completely randomly.

Pair Corralation between Micron Technology and MULTI CHEM

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.25 times less return on investment than MULTI CHEM. In addition to that, Micron Technology is 1.81 times more volatile than MULTI CHEM LTD. It trades about 0.0 of its total potential returns per unit of risk. MULTI CHEM LTD is currently generating about 0.02 per unit of volatility. If you would invest  184.00  in MULTI CHEM LTD on September 23, 2024 and sell it today you would earn a total of  2.00  from holding MULTI CHEM LTD or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Micron Technology  vs.  MULTI CHEM LTD

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.

MULTI CHEM LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MULTI CHEM LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MULTI CHEM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Micron Technology and MULTI CHEM

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

The idea behind Micron Technology and MULTI CHEM LTD 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.