Correlation Between Micron Technology and Eshallgo
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Eshallgo 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 Eshallgo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Eshallgo Class A, you can compare the effects of market volatilities on Micron Technology and Eshallgo 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 Eshallgo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Eshallgo.
Diversification Opportunities for Micron Technology and Eshallgo
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and Eshallgo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Eshallgo Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eshallgo Class A 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 Eshallgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eshallgo Class A has no effect on the direction of Micron Technology i.e., Micron Technology and Eshallgo go up and down completely randomly.
Pair Corralation between Micron Technology and Eshallgo
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Eshallgo. But the stock apears to be less risky and, when comparing its historical volatility, Micron Technology is 2.89 times less risky than Eshallgo. The stock trades about -0.02 of its potential returns per unit of risk. The Eshallgo Class A is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 236.00 in Eshallgo Class A on August 28, 2024 and sell it today you would earn a total of 156.00 from holding Eshallgo Class A or generate 66.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Eshallgo Class A
Performance |
| Timeline |
| Micron Technology |
| Eshallgo Class A |
Micron Technology and Eshallgo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Eshallgo
The main advantage of trading using opposite Micron Technology and Eshallgo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Eshallgo 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 Eshallgo will offset losses from the drop in Eshallgo's long position.The idea behind Micron Technology and Eshallgo Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eshallgo vs. Lululemon Athletica | Eshallgo vs. Asbury Automotive Group | Eshallgo vs. SunLink Health Systems | Eshallgo vs. Simon Property 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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