Correlation Between Micron Technology and Companhia

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

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

Diversification Opportunities for Micron Technology and Companhia

0.21

Correlation Coefficient

Micron Technology  Companhia

Modest diversification

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

Pair Corralation between Micron Technology and Companhia

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.41 times more return on investment than Companhia. However, Micron Technology is 1.41 times more volatile than Companhia de Saneamento. It trades about 0.04 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.05 per unit of risk. If you would invest  5,945  in Micron Technology on October 3, 2024 and sell it today you would earn a total of  2,471  from holding Micron Technology or generate 41.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.75%
Values	Daily Returns

Micron Technology  vs.  Companhia de Saneamento

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Companhia de Saneamento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia de Saneamento has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Micron Technology and Companhia

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

The idea behind Micron Technology and Companhia de Saneamento 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.