Correlation Between Wisekey International and Micron Technology

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

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

Diversification Opportunities for Wisekey International and Micron Technology

-0.06

Correlation Coefficient

Wisekey International  Micron Technology

Good diversification

The 3 months correlation between Wisekey and Micron is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Wisekey International 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 Wisekey International Holding are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Wisekey International i.e., Wisekey International and Micron Technology go up and down completely randomly.

Pair Corralation between Wisekey International and Micron Technology

Given the investment horizon of 90 days Wisekey International Holding is expected to generate 3.48 times more return on investment than Micron Technology. However, Wisekey International is 3.48 times more volatile than Micron Technology. It trades about 0.09 of its potential returns per unit of risk. Micron Technology is currently generating about 0.05 per unit of risk. If you would invest  174.00  in Wisekey International Holding on September 15, 2024 and sell it today you would earn a total of  610.00  from holding Wisekey International Holding or generate 350.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wisekey International Holding  vs.  Micron Technology

Wisekey International

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Wisekey International and Micron Technology

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

The idea behind Wisekey International Holding and Micron Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.