Correlation Between Micron Technology and SunLink Health

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

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

Diversification Opportunities for Micron Technology and SunLink Health

0.39

Correlation Coefficient

Micron Technology  SunLink Health

Weak diversification

The 3 months correlation between Micron and SunLink is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems 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 SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of Micron Technology i.e., Micron Technology and SunLink Health go up and down completely randomly.

Pair Corralation between Micron Technology and SunLink Health

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.62 times more return on investment than SunLink Health. However, Micron Technology is 1.62 times less risky than SunLink Health. It trades about 0.07 of its potential returns per unit of risk. SunLink Health Systems is currently generating about 0.03 per unit of risk. If you would invest  5,007  in Micron Technology on September 10, 2024 and sell it today you would earn a total of  5,110  from holding Micron Technology or generate 102.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  SunLink Health Systems

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

SunLink Health Systems

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SunLink Health Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, SunLink Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and SunLink Health

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

The idea behind Micron Technology and SunLink Health Systems 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.