Correlation Between Micron Technology and Gotion High

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

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

Diversification Opportunities for Micron Technology and Gotion High

0.35

Correlation Coefficient

Micron Technology  Gotion High

Weak diversification

The 3 months correlation between Micron and Gotion is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Gotion High tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotion High tech and Micron 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 Micron Technology are associated (or correlated) with Gotion High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotion High tech has no effect on the direction of Micron Technology i.e., Micron Technology and Gotion High go up and down completely randomly.

Pair Corralation between Micron Technology and Gotion High

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Gotion High. In addition to that, Micron Technology is 1.74 times more volatile than Gotion High tech. It trades about -0.11 of its total potential returns per unit of risk. Gotion High tech is currently generating about -0.13 per unit of volatility. If you would invest  2,375  in Gotion High tech on September 22, 2024 and sell it today you would lose (193.00) from holding Gotion High tech or give up 8.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.3%
Values	Daily Returns

Micron Technology  vs.  Gotion High tech

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.

Gotion High tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gotion High tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gotion High sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Gotion High

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

The idea behind Micron Technology and Gotion High tech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.