Correlation Between Micron Technology and GSTechnologies

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

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

Diversification Opportunities for Micron Technology and GSTechnologies

-0.53

Correlation Coefficient

Micron Technology  GSTechnologies

Excellent diversification

The 3 months correlation between Micron and GSTechnologies is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and GSTechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSTechnologies 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 GSTechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSTechnologies has no effect on the direction of Micron Technology i.e., Micron Technology and GSTechnologies go up and down completely randomly.

Pair Corralation between Micron Technology and GSTechnologies

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 41.03 times less return on investment than GSTechnologies. But when comparing it to its historical volatility, Micron Technology is 1.57 times less risky than GSTechnologies. It trades about 0.02 of its potential returns per unit of risk. GSTechnologies is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest  145.00  in GSTechnologies on October 10, 2024 and sell it today you would earn a total of  150.00  from holding GSTechnologies or generate 103.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Micron Technology  vs.  GSTechnologies

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.

GSTechnologies

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GSTechnologies are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GSTechnologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and GSTechnologies

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

The idea behind Micron Technology and GSTechnologies 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.