Correlation Between Micron Technology and Trans Global

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

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

Diversification Opportunities for Micron Technology and Trans Global

-0.18

Correlation Coefficient

Micron Technology  Trans Global

Good diversification

The 3 months correlation between Micron and Trans is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Trans Global Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trans Global Grp 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 Trans Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trans Global Grp has no effect on the direction of Micron Technology i.e., Micron Technology and Trans Global go up and down completely randomly.

Pair Corralation between Micron Technology and Trans Global

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Trans Global. But the stock apears to be less risky and, when comparing its historical volatility, Micron Technology is 10.64 times less risky than Trans Global. The stock trades about -0.09 of its potential returns per unit of risk. The Trans Global Grp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Trans Global Grp on September 26, 2024 and sell it today you would earn a total of  0.01  from holding Trans Global Grp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Micron Technology  vs.  Trans Global Grp

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Trans Global Grp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trans Global Grp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical and fundamental indicators, Trans Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Trans Global

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

The idea behind Micron Technology and Trans Global Grp 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.