Correlation Between PT Steel and Micron Technology

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Can any of the company-specific risk be diversified away by investing in both PT Steel and Micron Technology 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 PT Steel and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Steel Pipe and Micron Technology, you can compare the effects of market volatilities on PT Steel and Micron Technology 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 PT Steel with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Steel and Micron Technology.

Diversification Opportunities for PT Steel and Micron Technology

S08MicronDiversified AwayS08MicronDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between S08 and Micron is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and PT Steel 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 PT Steel Pipe are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of PT Steel i.e., PT Steel and Micron Technology go up and down completely randomly.

Pair Corralation between PT Steel and Micron Technology

Assuming the 90 days horizon PT Steel Pipe is expected to under-perform the Micron Technology. In addition to that, PT Steel is 1.26 times more volatile than Micron Technology. It trades about -0.02 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.02 per unit of volatility. If you would invest  9,866  in Micron Technology on October 29, 2024 and sell it today you would lose (45.00) from holding Micron Technology or give up 0.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PT Steel Pipe  vs.  Micron Technology

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-15-10-50
JavaScript chart by amCharts 3.21.15S08 MTE
       Timeline  
PT Steel Pipe 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PT Steel Pipe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.0110.01150.0120.01250.0130.01350.0140.0145
Micron Technology 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan80859095100105

PT Steel and Micron Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.43-5.56-3.7-1.830.01.763.545.337.11 0.0180.0200.0220.0240.0260.0280.030
JavaScript chart by amCharts 3.21.15S08 MTE
       Returns  

Pair Trading with PT Steel and Micron Technology

The main advantage of trading using opposite PT Steel and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Steel position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.
The idea behind PT Steel Pipe and Micron Technology 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.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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