Correlation Between Micron Technology and Pact Group

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

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

Diversification Opportunities for Micron Technology and Pact Group

-0.21

Correlation Coefficient

Micron Technology  Pact Group

Very good diversification

The 3 months correlation between Micron and Pact is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Pact Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pact Group Holdings 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 Pact Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pact Group Holdings has no effect on the direction of Micron Technology i.e., Micron Technology and Pact Group go up and down completely randomly.

Pair Corralation between Micron Technology and Pact Group

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Pact Group. In addition to that, Micron Technology is 2.18 times more volatile than Pact Group Holdings. It trades about -0.03 of its total potential returns per unit of risk. Pact Group Holdings is currently generating about 0.01 per unit of volatility. If you would invest  82.00  in Pact Group Holdings on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Pact Group Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Micron Technology  vs.  Pact Group Holdings

Micron Technology

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 5 (%) 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.

Pact Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pact Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Pact Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Micron Technology and Pact Group

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

The idea behind Micron Technology and Pact Group Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.