Correlation Between Micron Technology and Grenergy Renovables

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

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

Diversification Opportunities for Micron Technology and Grenergy Renovables

-0.25

Correlation Coefficient

Micron Technology  Grenergy Renovables

Very good diversification

The 3 months correlation between Micron and Grenergy is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Grenergy Renovables SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grenergy Renovables 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 Grenergy Renovables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grenergy Renovables has no effect on the direction of Micron Technology i.e., Micron Technology and Grenergy Renovables go up and down completely randomly.

Pair Corralation between Micron Technology and Grenergy Renovables

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Grenergy Renovables. In addition to that, Micron Technology is 1.2 times more volatile than Grenergy Renovables SA. It trades about 0.0 of its total potential returns per unit of risk. Grenergy Renovables SA is currently generating about 0.13 per unit of volatility. If you would invest  2,830  in Grenergy Renovables SA on December 3, 2024 and sell it today you would earn a total of  790.00  from holding Grenergy Renovables SA or generate 27.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Micron Technology  vs.  Grenergy Renovables SA

Micron Technology

Risk-Adjusted Performance

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.

Grenergy Renovables

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grenergy Renovables SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Grenergy Renovables exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Grenergy Renovables

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

The idea behind Micron Technology and Grenergy Renovables SA 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.