Correlation Between Micron Technology and Murree Brewery

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

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

Diversification Opportunities for Micron Technology and Murree Brewery

0.24

Correlation Coefficient

Micron Technology  Murree Brewery

Modest diversification

The 3 months correlation between Micron and Murree is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Murree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murree Brewery 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 Murree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murree Brewery has no effect on the direction of Micron Technology i.e., Micron Technology and Murree Brewery go up and down completely randomly.

Pair Corralation between Micron Technology and Murree Brewery

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.82 times less return on investment than Murree Brewery. In addition to that, Micron Technology is 1.27 times more volatile than Murree Brewery. It trades about 0.07 of its total potential returns per unit of risk. Murree Brewery is currently generating about 0.26 per unit of volatility. If you would invest  61,614  in Murree Brewery on September 15, 2024 and sell it today you would earn a total of  7,423  from holding Murree Brewery or generate 12.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Micron Technology  vs.  Murree Brewery

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 unfluctuating basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Murree Brewery

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Murree Brewery are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Murree Brewery disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Murree Brewery

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

The idea behind Micron Technology and Murree Brewery 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.