Correlation Between Micron Technology and Airsculpt Technologies

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

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

Diversification Opportunities for Micron Technology and Airsculpt Technologies

0.24

Correlation Coefficient

Micron Technology  Airsculpt Technologies

Modest diversification

The 3 months correlation between Micron and Airsculpt is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Airsculpt Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airsculpt Technologies 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 Airsculpt Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airsculpt Technologies has no effect on the direction of Micron Technology i.e., Micron Technology and Airsculpt Technologies go up and down completely randomly.

Pair Corralation between Micron Technology and Airsculpt Technologies

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.22 times less return on investment than Airsculpt Technologies. But when comparing it to its historical volatility, Micron Technology is 1.76 times less risky than Airsculpt Technologies. It trades about 0.06 of its potential returns per unit of risk. Airsculpt Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  371.00  in Airsculpt Technologies on September 24, 2024 and sell it today you would earn a total of  164.00  from holding Airsculpt Technologies or generate 44.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Micron Technology  vs.  Airsculpt Technologies

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Airsculpt Technologies

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Airsculpt Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Airsculpt Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Micron Technology and Airsculpt Technologies

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

The idea behind Micron Technology and Airsculpt Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.