Correlation Between SGH Old and MACOM Technology

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

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

Diversification Opportunities for SGH Old and MACOM Technology

0.0

Correlation Coefficient

SGH Old  MACOM Technology

Pay attention - limited upside

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

Pair Corralation between SGH Old and MACOM Technology

If you would invest (100.00) in SGH Old on December 27, 2024 and sell it today you would earn a total of  100.00  from holding SGH Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SGH Old  vs.  MACOM Technology Solutions

SGH Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days SGH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, SGH Old is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

MACOM Technology Sol

Risk-Adjusted Performance

Very Weak

Over the last 90 days MACOM Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with SGH Old and MACOM Technology

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

The idea behind SGH Old and MACOM Technology 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.