Correlation Between Micron Technology and Poongsan

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

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

Diversification Opportunities for Micron Technology and Poongsan

0.59

Correlation Coefficient

Micron Technology  Poongsan

Very weak diversification

The 3 months correlation between Micron and Poongsan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Micron Technology i.e., Micron Technology and Poongsan go up and down completely randomly.

Pair Corralation between Micron Technology and Poongsan

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 6.07 times less return on investment than Poongsan. In addition to that, Micron Technology is 2.04 times more volatile than Poongsan. It trades about 0.02 of its total potential returns per unit of risk. Poongsan is currently generating about 0.24 per unit of volatility. If you would invest  4,615,000  in Poongsan on October 10, 2024 and sell it today you would earn a total of  565,000  from holding Poongsan or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Micron Technology  vs.  Poongsan

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.

Poongsan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poongsan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Micron Technology and Poongsan

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

The idea behind Micron Technology and Poongsan 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.