Correlation Between Micron Technology and Theragen Etex
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Theragen Etex 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 Theragen Etex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Theragen Etex CoLtd, you can compare the effects of market volatilities on Micron Technology and Theragen Etex 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 Theragen Etex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Theragen Etex.
Diversification Opportunities for Micron Technology and Theragen Etex
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Micron and Theragen is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Theragen Etex CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theragen Etex CoLtd 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 Theragen Etex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theragen Etex CoLtd has no effect on the direction of Micron Technology i.e., Micron Technology and Theragen Etex go up and down completely randomly.
Pair Corralation between Micron Technology and Theragen Etex
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Theragen Etex. In addition to that, Micron Technology is 1.03 times more volatile than Theragen Etex CoLtd. It trades about -0.09 of its total potential returns per unit of risk. Theragen Etex CoLtd is currently generating about -0.06 per unit of volatility. If you would invest 334,000 in Theragen Etex CoLtd on September 13, 2024 and sell it today you would lose (13,500) from holding Theragen Etex CoLtd or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Micron Technology vs. Theragen Etex CoLtd
Performance |
| Timeline |
| Micron Technology |
| Theragen Etex CoLtd |
Micron Technology and Theragen Etex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Theragen Etex
The main advantage of trading using opposite Micron Technology and Theragen Etex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Theragen Etex 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 Theragen Etex will offset losses from the drop in Theragen Etex's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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