Correlation Between Micro Imaging and Rolls-Royce Holdings

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

By analyzing existing cross correlation between Micro Imaging Technology and Rolls Royce Holdings plc, you can compare the effects of market volatilities on Micro Imaging and Rolls-Royce Holdings 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 Micro Imaging with a short position of Rolls-Royce Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Imaging and Rolls-Royce Holdings.

Diversification Opportunities for Micro Imaging and Rolls-Royce Holdings

0.0

Correlation Coefficient

Micro Imaging  Rolls-Royce Holdings

Pay attention - limited upside

The 3 months correlation between Micro and Rolls-Royce is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Micro Imaging Technology and Rolls Royce Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings and Micro Imaging 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 Micro Imaging Technology are associated (or correlated) with Rolls-Royce Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Micro Imaging i.e., Micro Imaging and Rolls-Royce Holdings go up and down completely randomly.

Pair Corralation between Micro Imaging and Rolls-Royce Holdings

If you would invest  0.29  in Rolls Royce Holdings plc on October 26, 2024 and sell it today you would earn a total of  0.01  from holding Rolls Royce Holdings plc or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Micro Imaging Technology  vs.  Rolls Royce Holdings plc

Micro Imaging Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rolls Royce Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rolls Royce Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Micro Imaging and Rolls-Royce Holdings

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

The idea behind Micro Imaging Technology and Rolls Royce Holdings plc 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.

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.