Correlation Between Micron Technology and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Cebu Air 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 Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Cebu Air ADR, you can compare the effects of market volatilities on Micron Technology and Cebu Air 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 Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Cebu Air.
Diversification Opportunities for Micron Technology and Cebu Air
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Cebu is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR 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 Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Micron Technology i.e., Micron Technology and Cebu Air go up and down completely randomly.
Pair Corralation between Micron Technology and Cebu Air
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Cebu Air. But the stock apears to be less risky and, when comparing its historical volatility, Micron Technology is 1.2 times less risky than Cebu Air. The stock trades about -0.04 of its potential returns per unit of risk. The Cebu Air ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Cebu Air ADR on September 2, 2024 and sell it today you would earn a total of 35.00 from holding Cebu Air ADR or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Micron Technology vs. Cebu Air ADR
Performance |
| Timeline |
| Micron Technology |
| Cebu Air ADR |
Micron Technology and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Cebu Air
The main advantage of trading using opposite Micron Technology and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Cebu Air vs. Fidus Investment Corp | Cebu Air vs. 51Talk Online Education | Cebu Air vs. Nexstar Broadcasting Group | Cebu Air vs. Evolution Gaming Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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