Correlation Between Micron Technology and Cheng Uei

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

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

Diversification Opportunities for Micron Technology and Cheng Uei

0.12

Correlation Coefficient

Micron Technology  Cheng Uei

Average diversification

The 3 months correlation between Micron and Cheng is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision 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 Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Micron Technology i.e., Micron Technology and Cheng Uei go up and down completely randomly.

Pair Corralation between Micron Technology and Cheng Uei

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.92 times more return on investment than Cheng Uei. However, Micron Technology is 2.92 times more volatile than Cheng Uei Precision. It trades about 0.07 of its potential returns per unit of risk. Cheng Uei Precision is currently generating about 0.14 per unit of risk. If you would invest  8,992  in Micron Technology on December 3, 2024 and sell it today you would earn a total of  371.00  from holding Micron Technology or generate 4.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  Cheng Uei Precision

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.

Cheng Uei Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cheng Uei Precision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Micron Technology and Cheng Uei

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

The idea behind Micron Technology and Cheng Uei Precision 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.