Correlation Between Emeren and Micron Technology

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

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

Diversification Opportunities for Emeren and Micron Technology

0.21

Correlation Coefficient

Emeren  Micron Technology

Modest diversification

The 3 months correlation between Emeren and Micron is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Emeren Group and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Emeren 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 Emeren Group 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 Emeren i.e., Emeren and Micron Technology go up and down completely randomly.

Pair Corralation between Emeren and Micron Technology

Considering the 90-day investment horizon Emeren Group is expected to under-perform the Micron Technology. In addition to that, Emeren is 1.8 times more volatile than Micron Technology. It trades about -0.02 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.19 per unit of volatility. If you would invest  9,616  in Micron Technology on January 20, 2024 and sell it today you would earn a total of  1,577  from holding Micron Technology or generate 16.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Emeren Group  vs.  Micron Technology

Emeren Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Micron Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 10 (%) 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 Emeren and Micron Technology

The main advantage of trading using opposite Emeren and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emeren 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 Emeren Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.