Correlation Between Micron Technology and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Vipshop Holdings 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 Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Vipshop Holdings Limited, you can compare the effects of market volatilities on Micron Technology and Vipshop Holdings 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 Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Vipshop Holdings.
Diversification Opportunities for Micron Technology and Vipshop Holdings
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and Vipshop is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings 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 Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Micron Technology i.e., Micron Technology and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Micron Technology and Vipshop Holdings
Assuming the 90 days trading horizon Micron Technology is expected to under-perform the Vipshop Holdings. In addition to that, Micron Technology is 1.23 times more volatile than Vipshop Holdings Limited. It trades about -0.02 of its total potential returns per unit of risk. Vipshop Holdings Limited is currently generating about 0.01 per unit of volatility. If you would invest 4,200 in Vipshop Holdings Limited on September 5, 2024 and sell it today you would lose (9.00) from holding Vipshop Holdings Limited or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Micron Technology vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Micron Technology |
| Vipshop Holdings |
Micron Technology and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Vipshop Holdings
The main advantage of trading using opposite Micron Technology and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Micron Technology vs. Metalrgica Riosulense SA | Micron Technology vs. Prudential Financial | Micron Technology vs. Metalurgica Gerdau SA | Micron Technology vs. Zoom Video Communications |
| Vipshop Holdings vs. Micron Technology | Vipshop Holdings vs. NXP Semiconductors NV | Vipshop Holdings vs. Align Technology | Vipshop Holdings vs. Planet Fitness |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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