Correlation Between Micron Technology and Coronation Industrial

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

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

Diversification Opportunities for Micron Technology and Coronation Industrial

0.04

Correlation Coefficient

Micron Technology  Coronation Industrial

Significant diversification

The 3 months correlation between Micron and Coronation is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Coronation Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Industrial 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 Coronation Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Industrial has no effect on the direction of Micron Technology i.e., Micron Technology and Coronation Industrial go up and down completely randomly.

Pair Corralation between Micron Technology and Coronation Industrial

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Coronation Industrial. In addition to that, Micron Technology is 4.15 times more volatile than Coronation Industrial. It trades about -0.02 of its total potential returns per unit of risk. Coronation Industrial is currently generating about 0.02 per unit of volatility. If you would invest  29,696  in Coronation Industrial on December 5, 2024 and sell it today you would earn a total of  300.00  from holding Coronation Industrial or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Micron Technology  vs.  Coronation Industrial

Micron Technology

Risk-Adjusted Performance

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.

Coronation Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Industrial are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Industrial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Micron Technology and Coronation Industrial

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

The idea behind Micron Technology and Coronation Industrial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.