Correlation Between Evotec SE and Micron Technology

Can any of the company-specific risk be diversified away by investing in both Evotec SE 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 Evotec SE and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evotec SE and Micron Technology, you can compare the effects of market volatilities on Evotec SE 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 Evotec SE with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evotec SE and Micron Technology.

Diversification Opportunities for Evotec SE and Micron Technology

-0.14

Correlation Coefficient

Evotec SE  Micron Technology

Good diversification

The 3 months correlation between Evotec and Micron is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Evotec SE 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 Evotec SE 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 Evotec SE i.e., Evotec SE and Micron Technology go up and down completely randomly.

Pair Corralation between Evotec SE and Micron Technology

Assuming the 90 days trading horizon Evotec SE is expected to under-perform the Micron Technology. In addition to that, Evotec SE is 1.48 times more volatile than Micron Technology. It trades about -0.01 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.05 per unit of volatility. If you would invest  5,168  in Micron Technology on October 4, 2024 and sell it today you would earn a total of  3,293  from holding Micron Technology or generate 63.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Evotec SE  vs.  Micron Technology

Evotec SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evotec SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Evotec SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Evotec SE and Micron Technology

The main advantage of trading using opposite Evotec SE and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evotec SE 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 Evotec SE 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.