Correlation Between Micron Technology and PT Indo

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

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

Diversification Opportunities for Micron Technology and PT Indo

-0.32

Correlation Coefficient

Micron Technology  PT Indo

Very good diversification

The 3 months correlation between Micron and 3IB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and PT Indo Tambangraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Tambangraya 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 PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Tambangraya has no effect on the direction of Micron Technology i.e., Micron Technology and PT Indo go up and down completely randomly.

Pair Corralation between Micron Technology and PT Indo

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the PT Indo. In addition to that, Micron Technology is 1.26 times more volatile than PT Indo Tambangraya. It trades about -0.06 of its total potential returns per unit of risk. PT Indo Tambangraya is currently generating about -0.05 per unit of volatility. If you would invest  164.00  in PT Indo Tambangraya on September 29, 2024 and sell it today you would lose (16.00) from holding PT Indo Tambangraya or give up 9.76% of portfolio value over 90 days.

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

Micron Technology  vs.  PT Indo Tambangraya

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PT Indo Tambangraya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Tambangraya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Micron Technology and PT Indo

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

The idea behind Micron Technology and PT Indo Tambangraya 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.