Correlation Between Integrated Micro and BRNPB

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

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

Diversification Opportunities for Integrated Micro and BRNPB

-0.22

Correlation Coefficient

Integrated Micro  BRNPB

Very good diversification

The 3 months correlation between Integrated and BRNPB is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Micro Electronics and BRNPB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRNPB and Integrated Micro 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 Integrated Micro Electronics are associated (or correlated) with BRNPB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRNPB has no effect on the direction of Integrated Micro i.e., Integrated Micro and BRNPB go up and down completely randomly.

Pair Corralation between Integrated Micro and BRNPB

Assuming the 90 days trading horizon Integrated Micro is expected to generate 16.74 times less return on investment than BRNPB. But when comparing it to its historical volatility, Integrated Micro Electronics is 2.39 times less risky than BRNPB. It trades about 0.01 of its potential returns per unit of risk. BRNPB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10,300  in BRNPB on December 24, 2024 and sell it today you would earn a total of  200.00  from holding BRNPB or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.73%
Values	Daily Returns

Integrated Micro Electronics  vs.  BRNPB

Integrated Micro Ele

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Micro Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Integrated Micro is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BRNPB

Risk-Adjusted Performance

Insignificant

Over the last 90 days BRNPB has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, BRNPB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integrated Micro and BRNPB

The main advantage of trading using opposite Integrated Micro and BRNPB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Micro position performs unexpectedly, BRNPB 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 BRNPB will offset losses from the drop in BRNPB's long position.

The idea behind Integrated Micro Electronics and BRNPB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..