Correlation Between Micron Technology and Symrise AG

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

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

Diversification Opportunities for Micron Technology and Symrise AG

0.12

Correlation Coefficient

Micron Technology  Symrise AG

Average diversification

The 3 months correlation between Micron and Symrise is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Symrise AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symrise AG 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 Symrise AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symrise AG has no effect on the direction of Micron Technology i.e., Micron Technology and Symrise AG go up and down completely randomly.

Pair Corralation between Micron Technology and Symrise AG

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.62 times more return on investment than Symrise AG. However, Micron Technology is 1.62 times more volatile than Symrise AG. It trades about 0.04 of its potential returns per unit of risk. Symrise AG is currently generating about 0.02 per unit of risk. If you would invest  6,952  in Micron Technology on December 2, 2024 and sell it today you would earn a total of  2,411  from holding Micron Technology or generate 34.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.46%
Values	Daily Returns

Micron Technology  vs.  Symrise AG

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Symrise AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Symrise AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Symrise AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Micron Technology and Symrise AG

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

The idea behind Micron Technology and Symrise 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.