Correlation Between Micron Technology and CP ALL

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

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

Diversification Opportunities for Micron Technology and CP ALL

0.44

Correlation Coefficient

Micron Technology  CP ALL

Very weak diversification

The 3 months correlation between Micron and CVPBF is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and CP ALL Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP ALL Public 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 CP ALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP ALL Public has no effect on the direction of Micron Technology i.e., Micron Technology and CP ALL go up and down completely randomly.

Pair Corralation between Micron Technology and CP ALL

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.45 times more return on investment than CP ALL. However, Micron Technology is 2.45 times more volatile than CP ALL Public. It trades about -0.05 of its potential returns per unit of risk. CP ALL Public is currently generating about -0.15 per unit of risk. If you would invest  10,359  in Micron Technology on September 28, 2024 and sell it today you would lose (1,377) from holding Micron Technology or give up 13.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  CP ALL Public

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers 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 CP ALL

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

The idea behind Micron Technology and CP ALL Public 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.