Correlation Between Micron Technology and BaoMinh Insurance

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

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

Diversification Opportunities for Micron Technology and BaoMinh Insurance

-0.63

Correlation Coefficient

Micron Technology  BaoMinh Insurance

Excellent diversification

The 3 months correlation between Micron and BaoMinh is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and BaoMinh Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BaoMinh Insurance Corp 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 BaoMinh Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BaoMinh Insurance Corp has no effect on the direction of Micron Technology i.e., Micron Technology and BaoMinh Insurance go up and down completely randomly.

Pair Corralation between Micron Technology and BaoMinh Insurance

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.74 times more return on investment than BaoMinh Insurance. However, Micron Technology is 1.74 times more volatile than BaoMinh Insurance Corp. It trades about 0.04 of its potential returns per unit of risk. BaoMinh Insurance Corp is currently generating about 0.04 per unit of risk. If you would invest  8,182  in Micron Technology on September 14, 2024 and sell it today you would earn a total of  2,068  from holding Micron Technology or generate 25.27% return on investment over 90 days.

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

Micron Technology  vs.  BaoMinh Insurance Corp

Micron Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

BaoMinh Insurance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BaoMinh Insurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, BaoMinh Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and BaoMinh Insurance

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

The idea behind Micron Technology and BaoMinh Insurance Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .