Correlation Between PT Steel and Micron Technology
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
PT Steel Pipe vs. Micron Technology
Performance |
Timeline |
PT Steel Pipe |
Micron Technology |
PT Steel and Micron Technology Volatility Contrast
Predicted Return Density |
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.PT Steel vs. Discover Financial Services | ||
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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 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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