Correlation Between Micron Technology and MultiChoice
Can any of the company-specific risk be diversified away by investing in both Micron Technology and MultiChoice 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 MultiChoice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and MultiChoice Group, you can compare the effects of market volatilities on Micron Technology and MultiChoice 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 MultiChoice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and MultiChoice.
Diversification Opportunities for Micron Technology and MultiChoice
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and MultiChoice is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and MultiChoice Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MultiChoice Group 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 MultiChoice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MultiChoice Group has no effect on the direction of Micron Technology i.e., Micron Technology and MultiChoice go up and down completely randomly.
Pair Corralation between Micron Technology and MultiChoice
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the MultiChoice. In addition to that, Micron Technology is 15.77 times more volatile than MultiChoice Group. It trades about -0.13 of its total potential returns per unit of risk. MultiChoice Group is currently generating about 0.09 per unit of volatility. If you would invest 1,072,000 in MultiChoice Group on September 26, 2024 and sell it today you would earn a total of 5,800 from holding MultiChoice Group or generate 0.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Micron Technology vs. MultiChoice Group
Performance |
Timeline |
Micron Technology |
MultiChoice Group |
Micron Technology and MultiChoice Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and MultiChoice
The main advantage of trading using opposite Micron Technology and MultiChoice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, MultiChoice 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 MultiChoice will offset losses from the drop in MultiChoice's long position.The idea behind Micron Technology and MultiChoice Group 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.MultiChoice vs. MC Mining | MultiChoice vs. Trematon Capital Investments | MultiChoice vs. Hosken Consolidated Investments | MultiChoice vs. Harmony Gold Mining |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |