Correlation Between Micron Technology and LG Clean

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

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

Diversification Opportunities for Micron Technology and LG Clean

0.25

Correlation Coefficient

Micron Technology  LG Clean

Modest diversification

The 3 months correlation between Micron and RENW is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and LG Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Clean Energy 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 LG Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Clean Energy has no effect on the direction of Micron Technology i.e., Micron Technology and LG Clean go up and down completely randomly.

Pair Corralation between Micron Technology and LG Clean

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the LG Clean. In addition to that, Micron Technology is 2.76 times more volatile than LG Clean Energy. It trades about -0.06 of its total potential returns per unit of risk. LG Clean Energy is currently generating about -0.14 per unit of volatility. If you would invest  893.00  in LG Clean Energy on September 28, 2024 and sell it today you would lose (93.00) from holding LG Clean Energy or give up 10.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Micron Technology  vs.  LG Clean Energy

Micron Technology

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

LG Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Micron Technology and LG Clean

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

The idea behind Micron Technology and LG Clean Energy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..