Correlation Between Micron Technology and Opus One

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Can any of the company-specific risk be diversified away by investing in both Micron Technology and Opus One 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 Opus One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Opus One Resources, you can compare the effects of market volatilities on Micron Technology and Opus One 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 Opus One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Opus One.

Diversification Opportunities for Micron Technology and Opus One

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Micron and Opus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Opus One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus One Resources 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 Opus One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus One Resources has no effect on the direction of Micron Technology i.e., Micron Technology and Opus One go up and down completely randomly.

Pair Corralation between Micron Technology and Opus One

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Opus One. In addition to that, Micron Technology is 2.18 times more volatile than Opus One Resources. It trades about -0.11 of its total potential returns per unit of risk. Opus One Resources is currently generating about -0.21 per unit of volatility. If you would invest  5.00  in Opus One Resources on September 23, 2024 and sell it today you would lose (0.50) from holding Opus One Resources or give up 10.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Micron Technology  vs.  Opus One Resources

 Performance 
       Timeline  
Micron Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest stock price uproar, may contribute to short-horizon losses for the private investors.
Opus One Resources 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Opus One Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Opus One showed solid returns over the last few months and may actually be approaching a breakup point.

Micron Technology and Opus One Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and Opus One

The main advantage of trading using opposite Micron Technology and Opus One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Opus One 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 Opus One will offset losses from the drop in Opus One's long position.
The idea behind Micron Technology and Opus One Resources 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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