Correlation Between Micron Technology and Feng Ching

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

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

Diversification Opportunities for Micron Technology and Feng Ching

-0.41

Correlation Coefficient

Micron Technology  Feng Ching

Very good diversification

The 3 months correlation between Micron and Feng is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal 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 Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of Micron Technology i.e., Micron Technology and Feng Ching go up and down completely randomly.

Pair Corralation between Micron Technology and Feng Ching

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.3 times less return on investment than Feng Ching. In addition to that, Micron Technology is 1.34 times more volatile than Feng Ching Metal. It trades about 0.03 of its total potential returns per unit of risk. Feng Ching Metal is currently generating about 0.14 per unit of volatility. If you would invest  1,845  in Feng Ching Metal on December 27, 2024 and sell it today you would earn a total of  425.00  from holding Feng Ching Metal or generate 23.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.16%
Values	Daily Returns

Micron Technology  vs.  Feng Ching Metal

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.

Feng Ching Metal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Feng Ching Metal are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Feng Ching showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Feng Ching

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

The idea behind Micron Technology and Feng Ching Metal 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.