Correlation Between Micron Technology and Carlsberg

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

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

Diversification Opportunities for Micron Technology and Carlsberg

0.36

Correlation Coefficient

Micron Technology  Carlsberg

Weak diversification

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

Pair Corralation between Micron Technology and Carlsberg

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Carlsberg. In addition to that, Micron Technology is 3.06 times more volatile than Carlsberg AS. It trades about -0.1 of its total potential returns per unit of risk. Carlsberg AS is currently generating about -0.19 per unit of volatility. If you would invest  11,650  in Carlsberg AS on September 27, 2024 and sell it today you would lose (700.00) from holding Carlsberg AS or give up 6.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Micron Technology  vs.  Carlsberg AS

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Carlsberg AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Micron Technology and Carlsberg

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

The idea behind Micron Technology and Carlsberg AS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.