Correlation Between Microchip Technology and Moving IMage

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

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

Diversification Opportunities for Microchip Technology and Moving IMage

-0.45

Correlation Coefficient

Microchip Technology  Moving IMage

Very good diversification

The 3 months correlation between Microchip and Moving is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and Moving iMage Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moving iMage Technologies and Microchip Technology 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 Microchip Technology are associated (or correlated) with Moving IMage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moving iMage Technologies has no effect on the direction of Microchip Technology i.e., Microchip Technology and Moving IMage go up and down completely randomly.

Pair Corralation between Microchip Technology and Moving IMage

Given the investment horizon of 90 days Microchip Technology is expected to under-perform the Moving IMage. But the stock apears to be less risky and, when comparing its historical volatility, Microchip Technology is 2.45 times less risky than Moving IMage. The stock trades about -0.06 of its potential returns per unit of risk. The Moving iMage Technologies is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Moving iMage Technologies on November 28, 2024 and sell it today you would lose (11.00) from holding Moving iMage Technologies or give up 16.67% of portfolio value over 90 days.

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

Microchip Technology  vs.  Moving iMage Technologies

Microchip Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microchip Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Moving iMage Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moving iMage Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Microchip Technology and Moving IMage

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

The idea behind Microchip Technology and Moving iMage Technologies 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.