Correlation Between Micron Technology and Polarx

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

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

Diversification Opportunities for Micron Technology and Polarx

-0.04

Correlation Coefficient

Micron Technology  Polarx

Good diversification

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

Pair Corralation between Micron Technology and Polarx

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.03 times less return on investment than Polarx. But when comparing it to its historical volatility, Micron Technology is 3.17 times less risky than Polarx. It trades about 0.07 of its potential returns per unit of risk. Polarx is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Polarx on September 14, 2024 and sell it today you would lose (1.10) from holding Polarx or give up 57.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Micron Technology  vs.  Polarx

Micron Technology

Risk-Adjusted Performance

7 of 100

Insignificant

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

Polarx

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Polarx are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Polarx may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and Polarx

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

The idea behind Micron Technology and Polarx 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..