Correlation Between Micron Technology and BANPU POWER
Can any of the company-specific risk be diversified away by investing in both Micron Technology and BANPU POWER 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 BANPU POWER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and BANPU POWER, you can compare the effects of market volatilities on Micron Technology and BANPU POWER 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 BANPU POWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and BANPU POWER.
Diversification Opportunities for Micron Technology and BANPU POWER
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Micron and BANPU is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and BANPU POWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANPU POWER 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 BANPU POWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANPU POWER has no effect on the direction of Micron Technology i.e., Micron Technology and BANPU POWER go up and down completely randomly.
Pair Corralation between Micron Technology and BANPU POWER
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.56 times more return on investment than BANPU POWER. However, Micron Technology is 2.56 times more volatile than BANPU POWER. It trades about 0.06 of its potential returns per unit of risk. BANPU POWER is currently generating about -0.02 per unit of risk. If you would invest 6,431 in Micron Technology on September 12, 2024 and sell it today you would earn a total of 3,851 from holding Micron Technology or generate 59.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.59% |
| Values | Daily Returns |
Micron Technology vs. BANPU POWER
Performance |
| Timeline |
| Micron Technology |
| BANPU POWER |
Micron Technology and BANPU POWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and BANPU POWER
The main advantage of trading using opposite Micron Technology and BANPU POWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, BANPU POWER 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 BANPU POWER will offset losses from the drop in BANPU POWER's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| BANPU POWER vs. Charoen Pokphand Foods | BANPU POWER vs. The Siam Cement | BANPU POWER vs. Ratch Group Public | BANPU POWER vs. Amata Public |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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