Correlation Between Confluent and Micro-Mechanics (Holdings)
Can any of the company-specific risk be diversified away by investing in both Confluent and Micro-Mechanics (Holdings) 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 Confluent and Micro-Mechanics (Holdings) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Confluent and Micro Mechanics, you can compare the effects of market volatilities on Confluent and Micro-Mechanics (Holdings) 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 Confluent with a short position of Micro-Mechanics (Holdings). Check out your portfolio center. Please also check ongoing floating volatility patterns of Confluent and Micro-Mechanics (Holdings).
Diversification Opportunities for Confluent and Micro-Mechanics (Holdings)
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Confluent and Micro-Mechanics is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Micro Mechanics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro-Mechanics (Holdings) and Confluent 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 Confluent are associated (or correlated) with Micro-Mechanics (Holdings). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro-Mechanics (Holdings) has no effect on the direction of Confluent i.e., Confluent and Micro-Mechanics (Holdings) go up and down completely randomly.
Pair Corralation between Confluent and Micro-Mechanics (Holdings)
Given the investment horizon of 90 days Confluent is expected to generate 1.09 times more return on investment than Micro-Mechanics (Holdings). However, Confluent is 1.09 times more volatile than Micro Mechanics. It trades about 0.29 of its potential returns per unit of risk. Micro Mechanics is currently generating about 0.13 per unit of risk. If you would invest 2,038 in Confluent on August 30, 2024 and sell it today you would earn a total of 1,091 from holding Confluent or generate 53.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Confluent vs. Micro Mechanics
Performance |
| Timeline |
| Confluent |
| Micro-Mechanics (Holdings) |
Confluent and Micro-Mechanics (Holdings) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Confluent and Micro-Mechanics (Holdings)
The main advantage of trading using opposite Confluent and Micro-Mechanics (Holdings) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent position performs unexpectedly, Micro-Mechanics (Holdings) 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 Micro-Mechanics (Holdings) will offset losses from the drop in Micro-Mechanics (Holdings)'s long position.| Confluent vs. DigitalOcean Holdings | Confluent vs. Doximity | Confluent vs. Gitlab Inc | Confluent vs. Global E Online |
| Micro-Mechanics (Holdings) vs. ASML Holding NV | Micro-Mechanics (Holdings) vs. ASML Holding NV | Micro-Mechanics (Holdings) vs. Applied Materials | Micro-Mechanics (Holdings) vs. Lam Research Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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