Correlation Between Micron Technology and Chesapeake Finl

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

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

Diversification Opportunities for Micron Technology and Chesapeake Finl

-0.05

Correlation Coefficient

Micron Technology  Chesapeake Finl

Good diversification

The 3 months correlation between Micron and Chesapeake is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Chesapeake Finl Shs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Finl Shs 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 Chesapeake Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Finl Shs has no effect on the direction of Micron Technology i.e., Micron Technology and Chesapeake Finl go up and down completely randomly.

Pair Corralation between Micron Technology and Chesapeake Finl

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.95 times more return on investment than Chesapeake Finl. However, Micron Technology is 1.95 times more volatile than Chesapeake Finl Shs. It trades about 0.3 of its potential returns per unit of risk. Chesapeake Finl Shs is currently generating about -0.04 per unit of risk. If you would invest  8,698  in Micron Technology on October 20, 2024 and sell it today you would earn a total of  1,877  from holding Micron Technology or generate 21.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Micron Technology  vs.  Chesapeake Finl Shs

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.

Chesapeake Finl Shs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Finl Shs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Chesapeake Finl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Micron Technology and Chesapeake Finl

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

The idea behind Micron Technology and Chesapeake Finl Shs 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.