Correlation Between Micron Technology and Guangshen Railway
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Guangshen Railway 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 Guangshen Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Guangshen Railway, you can compare the effects of market volatilities on Micron Technology and Guangshen Railway 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 Guangshen Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Guangshen Railway.
Diversification Opportunities for Micron Technology and Guangshen Railway
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Micron and Guangshen is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Guangshen Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangshen Railway 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 Guangshen Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangshen Railway has no effect on the direction of Micron Technology i.e., Micron Technology and Guangshen Railway go up and down completely randomly.
Pair Corralation between Micron Technology and Guangshen Railway
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 4.29 times more return on investment than Guangshen Railway. However, Micron Technology is 4.29 times more volatile than Guangshen Railway. It trades about 0.26 of its potential returns per unit of risk. Guangshen Railway is currently generating about 0.22 per unit of risk. If you would invest 9,000 in Micron Technology on October 21, 2024 and sell it today you would earn a total of 1,575 from holding Micron Technology or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Micron Technology vs. Guangshen Railway
Performance |
| Timeline |
| Micron Technology |
| Guangshen Railway |
Micron Technology and Guangshen Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Guangshen Railway
The main advantage of trading using opposite Micron Technology and Guangshen Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Guangshen Railway 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 Guangshen Railway will offset losses from the drop in Guangshen Railway's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Guangshen Railway vs. MACOM Technology Solutions | Guangshen Railway vs. Strategic Education | Guangshen Railway vs. Bill Com Holdings | Guangshen Railway vs. BK Technologies |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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