Correlation Between Micron Technology and CHINA VANKE

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

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

Diversification Opportunities for Micron Technology and CHINA VANKE

0.37

Correlation Coefficient

Micron Technology  CHINA VANKE

Weak diversification

The 3 months correlation between Micron and CHINA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and CHINA VANKE TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA VANKE TD 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 CHINA VANKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA VANKE TD has no effect on the direction of Micron Technology i.e., Micron Technology and CHINA VANKE go up and down completely randomly.

Pair Corralation between Micron Technology and CHINA VANKE

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the CHINA VANKE. In addition to that, Micron Technology is 1.81 times more volatile than CHINA VANKE TD. It trades about -0.11 of its total potential returns per unit of risk. CHINA VANKE TD is currently generating about -0.16 per unit of volatility. If you would invest  74.00  in CHINA VANKE TD on September 23, 2024 and sell it today you would lose (7.00) from holding CHINA VANKE TD or give up 9.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Micron Technology  vs.  CHINA VANKE TD

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

CHINA VANKE TD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA VANKE TD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA VANKE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and CHINA VANKE

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

The idea behind Micron Technology and CHINA VANKE TD 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 Anywhere module to track or share privately all of your investments from the convenience of any device.