Correlation Between Micron Technology and SEB SA

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

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

Diversification Opportunities for Micron Technology and SEB SA

-0.45

Correlation Coefficient

Micron Technology  SEB SA

Very good diversification

The 3 months correlation between Micron and SEB is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Micron Technology i.e., Micron Technology and SEB SA go up and down completely randomly.

Pair Corralation between Micron Technology and SEB SA

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.17 times more return on investment than SEB SA. However, Micron Technology is 1.17 times more volatile than SEB SA. It trades about 0.03 of its potential returns per unit of risk. SEB SA is currently generating about -0.01 per unit of risk. If you would invest  10,625  in Micron Technology on October 26, 2024 and sell it today you would earn a total of  298.00  from holding Micron Technology or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Micron Technology  vs.  SEB SA

Micron Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SEB SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEB SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SEB SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and SEB SA

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

The idea behind Micron Technology and SEB SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.