Correlation Between Microchip Technology and CleanTech Lithium

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

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

Diversification Opportunities for Microchip Technology and CleanTech Lithium

0.0

Correlation Coefficient

Microchip Technology  CleanTech Lithium

Pay attention - limited upside

The 3 months correlation between Microchip and CleanTech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and CleanTech Lithium Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium Plc and Microchip 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 Microchip Technology are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium Plc has no effect on the direction of Microchip Technology i.e., Microchip Technology and CleanTech Lithium go up and down completely randomly.

Pair Corralation between Microchip Technology and CleanTech Lithium

If you would invest  5,828  in Microchip Technology on May 26, 2025 and sell it today you would earn a total of  1,086  from holding Microchip Technology or generate 18.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Microchip Technology  vs.  CleanTech Lithium Plc

Microchip Technology

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, Microchip Technology reported solid returns over the last few months and may actually be approaching a breakup point.

CleanTech Lithium Plc

Risk-Adjusted Performance

Weakest

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

Pair Trading with Microchip Technology and CleanTech Lithium

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

The idea behind Microchip Technology and CleanTech Lithium Plc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.