Correlation Between Micron Technology and Argha Karya

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

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

Diversification Opportunities for Micron Technology and Argha Karya

0.5

Correlation Coefficient

Micron Technology  Argha Karya

Very weak diversification

The 3 months correlation between Micron and Argha is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Argha Karya Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argha Karya Prima 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 Argha Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argha Karya Prima has no effect on the direction of Micron Technology i.e., Micron Technology and Argha Karya go up and down completely randomly.

Pair Corralation between Micron Technology and Argha Karya

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.32 times less return on investment than Argha Karya. In addition to that, Micron Technology is 1.13 times more volatile than Argha Karya Prima. It trades about 0.0 of its total potential returns per unit of risk. Argha Karya Prima is currently generating about 0.01 per unit of volatility. If you would invest  61,500  in Argha Karya Prima on October 21, 2024 and sell it today you would lose (1,500) from holding Argha Karya Prima or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Micron Technology  vs.  Argha Karya Prima

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Argha Karya Prima

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argha Karya Prima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Micron Technology and Argha Karya

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

The idea behind Micron Technology and Argha Karya Prima 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.