Correlation Between SigmaTron International and Plexus Corp

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

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

Diversification Opportunities for SigmaTron International and Plexus Corp

0.86

Correlation Coefficient

SigmaTron International  Plexus Corp

Very poor diversification

The 3 months correlation between SigmaTron and Plexus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SigmaTron International and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp and SigmaTron International 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 SigmaTron International are associated (or correlated) with Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of SigmaTron International i.e., SigmaTron International and Plexus Corp go up and down completely randomly.

Pair Corralation between SigmaTron International and Plexus Corp

Given the investment horizon of 90 days SigmaTron International is expected to under-perform the Plexus Corp. In addition to that, SigmaTron International is 1.82 times more volatile than Plexus Corp. It trades about -0.13 of its total potential returns per unit of risk. Plexus Corp is currently generating about -0.15 per unit of volatility. If you would invest  15,669  in Plexus Corp on December 30, 2024 and sell it today you would lose (2,892) from holding Plexus Corp or give up 18.46% of portfolio value over 90 days.

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

SigmaTron International  vs.  Plexus Corp

SigmaTron International

Risk-Adjusted Performance

Very Weak

Over the last 90 days SigmaTron International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Plexus Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plexus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SigmaTron International and Plexus Corp

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

The idea behind SigmaTron International and Plexus Corp 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.