Correlation Between Micron Technology and Thai Union

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

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

Diversification Opportunities for Micron Technology and Thai Union

-0.19

Correlation Coefficient

Micron Technology  Thai Union

Good diversification

The 3 months correlation between Micron and Thai is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group 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 Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of Micron Technology i.e., Micron Technology and Thai Union go up and down completely randomly.

Pair Corralation between Micron Technology and Thai Union

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 89.07 times less return on investment than Thai Union. But when comparing it to its historical volatility, Micron Technology is 40.61 times less risky than Thai Union. It trades about 0.05 of its potential returns per unit of risk. Thai Union Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,301  in Thai Union Group on September 13, 2024 and sell it today you would earn a total of  9.00  from holding Thai Union Group or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Micron Technology  vs.  Thai Union Group

Micron Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thai Union Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Union Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Thai Union disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Thai Union

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

The idea behind Micron Technology and Thai Union Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.