Correlation Between Micron Technology and Sensirion Holding

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

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

Diversification Opportunities for Micron Technology and Sensirion Holding

0.22

Correlation Coefficient

Micron Technology  Sensirion Holding

Modest diversification

The 3 months correlation between Micron and Sensirion is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Sensirion Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensirion Holding 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 Sensirion Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensirion Holding has no effect on the direction of Micron Technology i.e., Micron Technology and Sensirion Holding go up and down completely randomly.

Pair Corralation between Micron Technology and Sensirion Holding

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.51 times less return on investment than Sensirion Holding. In addition to that, Micron Technology is 1.02 times more volatile than Sensirion Holding AG. It trades about 0.05 of its total potential returns per unit of risk. Sensirion Holding AG is currently generating about 0.12 per unit of volatility. If you would invest  5,540  in Sensirion Holding AG on December 29, 2024 and sell it today you would earn a total of  1,550  from holding Sensirion Holding AG or generate 27.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Micron Technology  vs.  Sensirion Holding AG

Micron Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 3 (%) 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 April 2025.

Sensirion Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sensirion Holding AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sensirion Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Sensirion Holding

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

The idea behind Micron Technology and Sensirion Holding AG 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.