Correlation Between Micron Technology and AGP

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

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

Diversification Opportunities for Micron Technology and AGP

-0.36

Correlation Coefficient

Micron Technology  AGP

Very good diversification

The 3 months correlation between Micron and AGP is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and AGP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGP 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 AGP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGP has no effect on the direction of Micron Technology i.e., Micron Technology and AGP go up and down completely randomly.

Pair Corralation between Micron Technology and AGP

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.66 times less return on investment than AGP. In addition to that, Micron Technology is 1.23 times more volatile than AGP. It trades about 0.04 of its total potential returns per unit of risk. AGP is currently generating about 0.17 per unit of volatility. If you would invest  4,622  in AGP on September 28, 2024 and sell it today you would earn a total of  11,853  from holding AGP or generate 256.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.59%
Values	Daily Returns

Micron Technology  vs.  AGP

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.

AGP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, AGP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and AGP

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

The idea behind Micron Technology and AGP 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.