Correlation Between CM Hospitalar and Micron Technology
Can any of the company-specific risk be diversified away by investing in both CM Hospitalar 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 CM Hospitalar and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CM Hospitalar SA and Micron Technology, you can compare the effects of market volatilities on CM Hospitalar 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 CM Hospitalar with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and Micron Technology.
Diversification Opportunities for CM Hospitalar and Micron Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VVEO3 and Micron is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and CM Hospitalar 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 CM Hospitalar SA 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 CM Hospitalar i.e., CM Hospitalar and Micron Technology go up and down completely randomly.
Pair Corralation between CM Hospitalar and Micron Technology
Assuming the 90 days trading horizon CM Hospitalar SA is expected to under-perform the Micron Technology. In addition to that, CM Hospitalar is 1.41 times more volatile than Micron Technology. It trades about -0.13 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.07 per unit of volatility. If you would invest 5,438 in Micron Technology on September 2, 2024 and sell it today you would earn a total of 4,231 from holding Micron Technology or generate 77.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CM Hospitalar SA vs. Micron Technology
Performance |
| Timeline |
| CM Hospitalar SA |
| Micron Technology |
CM Hospitalar and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CM Hospitalar and Micron Technology
The main advantage of trading using opposite CM Hospitalar and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CM Hospitalar 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.| CM Hospitalar vs. Profarma Distribuidora de | CM Hospitalar vs. Fras le SA | CM Hospitalar vs. Western Digital | CM Hospitalar vs. Energisa SA |
| Micron Technology vs. American Airlines Group | Micron Technology vs. New Oriental Education | Micron Technology vs. Bread Financial Holdings | Micron Technology vs. Cognizant Technology Solutions |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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