Correlation Between Micron Technology and ZEN Graphene

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

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

Diversification Opportunities for Micron Technology and ZEN Graphene

-0.57

Correlation Coefficient

Micron Technology  ZEN Graphene

Excellent diversification

The 3 months correlation between Micron and ZEN is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and ZEN Graphene Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN Graphene Solutions 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 ZEN Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN Graphene Solutions has no effect on the direction of Micron Technology i.e., Micron Technology and ZEN Graphene go up and down completely randomly.

Pair Corralation between Micron Technology and ZEN Graphene

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.55 times more return on investment than ZEN Graphene. However, Micron Technology is 1.82 times less risky than ZEN Graphene. It trades about 0.29 of its potential returns per unit of risk. ZEN Graphene Solutions is currently generating about -0.03 per unit of risk. If you would invest  11,178  in Micron Technology on February 24, 2024 and sell it today you would earn a total of  1,449  from holding Micron Technology or generate 12.96% return on investment over 90 days.

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

Micron Technology  vs.  ZEN Graphene Solutions

Micron Technology

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

ZEN Graphene Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZEN Graphene Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Micron Technology and ZEN Graphene

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

The idea behind Micron Technology and ZEN Graphene Solutions 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.