Correlation Between Micron Technology and SHIONOGI

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

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

Diversification Opportunities for Micron Technology and SHIONOGI

-0.37

Correlation Coefficient

Micron Technology  SHIONOGI

Very good diversification

The 3 months correlation between Micron and SHIONOGI is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and SHIONOGI LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIONOGI 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 SHIONOGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIONOGI LTD has no effect on the direction of Micron Technology i.e., Micron Technology and SHIONOGI go up and down completely randomly.

Pair Corralation between Micron Technology and SHIONOGI

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the SHIONOGI. In addition to that, Micron Technology is 2.4 times more volatile than SHIONOGI LTD. It trades about -0.08 of its total potential returns per unit of risk. SHIONOGI LTD is currently generating about 0.06 per unit of volatility. If you would invest  1,180  in SHIONOGI LTD on September 21, 2024 and sell it today you would earn a total of  140.00  from holding SHIONOGI LTD or generate 11.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Micron Technology  vs.  SHIONOGI 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

SHIONOGI LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIONOGI LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SHIONOGI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Micron Technology and SHIONOGI

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

The idea behind Micron Technology and SHIONOGI 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.