Correlation Between Micron Technology and PT Charoen
Can any of the company-specific risk be diversified away by investing in both Micron Technology and PT Charoen 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 PT Charoen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and PT Charoen Pokphand, you can compare the effects of market volatilities on Micron Technology and PT Charoen 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 PT Charoen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and PT Charoen.
Diversification Opportunities for Micron Technology and PT Charoen
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and 0CP1 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and PT Charoen Pokphand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charoen Pokphand 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 PT Charoen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charoen Pokphand has no effect on the direction of Micron Technology i.e., Micron Technology and PT Charoen go up and down completely randomly.
Pair Corralation between Micron Technology and PT Charoen
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.11 times more return on investment than PT Charoen. However, Micron Technology is 1.11 times more volatile than PT Charoen Pokphand. It trades about 0.02 of its potential returns per unit of risk. PT Charoen Pokphand is currently generating about 0.01 per unit of risk. If you would invest 8,509 in Micron Technology on September 24, 2024 and sell it today you would earn a total of 396.00 from holding Micron Technology or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
Micron Technology vs. PT Charoen Pokphand
Performance |
| Timeline |
| Micron Technology |
| PT Charoen Pokphand |
Micron Technology and PT Charoen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and PT Charoen
The main advantage of trading using opposite Micron Technology and PT Charoen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, PT Charoen 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 PT Charoen will offset losses from the drop in PT Charoen's long position.| Micron Technology vs. Diodes Incorporated | Micron Technology vs. Daqo New Energy | Micron Technology vs. Nano Labs | Micron Technology vs. Impinj Inc |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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