Correlation Between Micron Technology and Tang Eng

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

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

Diversification Opportunities for Micron Technology and Tang Eng

-0.29

Correlation Coefficient

Micron Technology  Tang Eng

Very good diversification

The 3 months correlation between Micron and Tang is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron 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 Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Micron Technology i.e., Micron Technology and Tang Eng go up and down completely randomly.

Pair Corralation between Micron Technology and Tang Eng

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.87 times more return on investment than Tang Eng. However, Micron Technology is 3.87 times more volatile than Tang Eng Iron. It trades about 0.04 of its potential returns per unit of risk. Tang Eng Iron is currently generating about 0.06 per unit of risk. If you would invest  8,852  in Micron Technology on December 27, 2024 and sell it today you would earn a total of  361.00  from holding Micron Technology or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Micron Technology  vs.  Tang Eng Iron

Micron Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tang Eng Iron

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tang Eng Iron are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tang Eng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Micron Technology and Tang Eng

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

The idea behind Micron Technology and Tang Eng Iron 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.