Correlation Between Micron Technology and Siam Steel

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

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

Diversification Opportunities for Micron Technology and Siam Steel

0.22

Correlation Coefficient

Micron Technology  Siam Steel

Modest diversification

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

Pair Corralation between Micron Technology and Siam Steel

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Siam Steel. In addition to that, Micron Technology is 2.49 times more volatile than Siam Steel Service. It trades about -0.01 of its total potential returns per unit of risk. Siam Steel Service is currently generating about 0.04 per unit of volatility. If you would invest  206.00  in Siam Steel Service on December 4, 2024 and sell it today you would earn a total of  2.00  from holding Siam Steel Service or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Micron Technology  vs.  Siam Steel Service

Micron Technology

Risk-Adjusted Performance

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.

Siam Steel Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siam Steel Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Siam Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Micron Technology and Siam Steel

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

The idea behind Micron Technology and Siam Steel Service 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.