Correlation Between Data IO and Sanmina

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

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

Diversification Opportunities for Data IO and Sanmina

0.76

Correlation Coefficient

Data IO  Sanmina

Poor diversification

The 3 months correlation between Data and Sanmina is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Data IO and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina and Data IO 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 Data IO are associated (or correlated) with Sanmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanmina has no effect on the direction of Data IO i.e., Data IO and Sanmina go up and down completely randomly.

Pair Corralation between Data IO and Sanmina

Given the investment horizon of 90 days Data IO is expected to under-perform the Sanmina. In addition to that, Data IO is 1.34 times more volatile than Sanmina. It trades about -0.05 of its total potential returns per unit of risk. Sanmina is currently generating about 0.02 per unit of volatility. If you would invest  7,564  in Sanmina on December 28, 2024 and sell it today you would earn a total of  101.00  from holding Sanmina or generate 1.34% return on investment over 90 days.

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

Data IO  vs.  Sanmina

Data IO

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data IO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sanmina

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sanmina are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sanmina is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Data IO and Sanmina

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

The idea behind Data IO and Sanmina 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.