Correlation Between Micron Technology and Samart Telcoms

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

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

Diversification Opportunities for Micron Technology and Samart Telcoms

0.46

Correlation Coefficient

Micron Technology  Samart Telcoms

Very weak diversification

The 3 months correlation between Micron and Samart is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Samart Telcoms Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Telcoms Public 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 Samart Telcoms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Telcoms Public has no effect on the direction of Micron Technology i.e., Micron Technology and Samart Telcoms go up and down completely randomly.

Pair Corralation between Micron Technology and Samart Telcoms

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 26.26 times less return on investment than Samart Telcoms. But when comparing it to its historical volatility, Micron Technology is 20.76 times less risky than Samart Telcoms. It trades about 0.05 of its potential returns per unit of risk. Samart Telcoms Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  311.00  in Samart Telcoms Public on September 14, 2024 and sell it today you would earn a total of  344.00  from holding Samart Telcoms Public or generate 110.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.65%
Values	Daily Returns

Micron Technology  vs.  Samart Telcoms Public

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

Samart Telcoms Public

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Telcoms Public are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Samart Telcoms sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Samart Telcoms

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

The idea behind Micron Technology and Samart Telcoms Public 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.