Correlation Between Micron Technology and Indara Insurance

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

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

Diversification Opportunities for Micron Technology and Indara Insurance

0.05

Correlation Coefficient

Micron Technology  Indara Insurance

Significant diversification

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

Pair Corralation between Micron Technology and Indara Insurance

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 23.06 times less return on investment than Indara Insurance. But when comparing it to its historical volatility, Micron Technology is 20.81 times less risky than Indara Insurance. It trades about 0.05 of its potential returns per unit of risk. Indara Insurance Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11,500  in Indara Insurance Public on September 14, 2024 and sell it today you would lose (3,600) from holding Indara Insurance Public or give up 31.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.28%
Values	Daily Returns

Micron Technology  vs.  Indara Insurance Public

Micron Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Indara Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indara Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Micron Technology and Indara Insurance

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

The idea behind Micron Technology and Indara Insurance 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.