Correlation Between Micron Technology and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Oriental Precision 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 Oriental Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Oriental Precision Engineering, you can compare the effects of market volatilities on Micron Technology and Oriental Precision 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 Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Oriental Precision.
Diversification Opportunities for Micron Technology and Oriental Precision
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Oriental is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision 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 Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of Micron Technology i.e., Micron Technology and Oriental Precision go up and down completely randomly.
Pair Corralation between Micron Technology and Oriental Precision
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.91 times less return on investment than Oriental Precision. But when comparing it to its historical volatility, Micron Technology is 1.01 times less risky than Oriental Precision. It trades about 0.02 of its potential returns per unit of risk. Oriental Precision Engineering is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 292,500 in Oriental Precision Engineering on September 24, 2024 and sell it today you would earn a total of 233,500 from holding Oriental Precision Engineering or generate 79.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.39% |
| Values | Daily Returns |
Micron Technology vs. Oriental Precision Engineering
Performance |
| Timeline |
| Micron Technology |
| Oriental Precision |
Micron Technology and Oriental Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Oriental Precision
The main advantage of trading using opposite Micron Technology and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.| Micron Technology vs. Diodes Incorporated | Micron Technology vs. Daqo New Energy | Micron Technology vs. Nano Labs | Micron Technology vs. Impinj Inc |
| Oriental Precision vs. KakaoBank Corp | Oriental Precision vs. NICE Information Service | Oriental Precision vs. Korea Information Engineering | Oriental Precision vs. Lotte Data Communication |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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