Correlation Between Micron Technology and Mindteck

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

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

Diversification Opportunities for Micron Technology and Mindteck

-0.51

Correlation Coefficient

Micron Technology  Mindteck

Excellent diversification

The 3 months correlation between Micron and Mindteck is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Mindteck Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mindteck Limited 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 Mindteck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mindteck Limited has no effect on the direction of Micron Technology i.e., Micron Technology and Mindteck go up and down completely randomly.

Pair Corralation between Micron Technology and Mindteck

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.88 times more return on investment than Mindteck. However, Micron Technology is 1.14 times less risky than Mindteck. It trades about 0.09 of its potential returns per unit of risk. Mindteck Limited is currently generating about -0.05 per unit of risk. If you would invest  8,863  in Micron Technology on September 17, 2024 and sell it today you would earn a total of  1,387  from holding Micron Technology or generate 15.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Micron Technology  vs.  Mindteck Limited

Micron Technology

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mindteck Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mindteck Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Micron Technology and Mindteck

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

The idea behind Micron Technology and Mindteck Limited 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.