Correlation Between Super Micro and Celestica

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

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

Diversification Opportunities for Super Micro and Celestica

-0.43

Correlation Coefficient

Super Micro  Celestica

Very good diversification

The 3 months correlation between Super and Celestica is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Super Micro 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 Super Micro Computer are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Super Micro i.e., Super Micro and Celestica go up and down completely randomly.

Pair Corralation between Super Micro and Celestica

Given the investment horizon of 90 days Super Micro is expected to generate 38.49 times less return on investment than Celestica. In addition to that, Super Micro is 2.0 times more volatile than Celestica. It trades about 0.01 of its total potential returns per unit of risk. Celestica is currently generating about 0.45 per unit of volatility. If you would invest  9,305  in Celestica on October 20, 2024 and sell it today you would earn a total of  2,023  from holding Celestica or generate 21.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Super Micro Computer  vs.  Celestica

Super Micro Computer

Risk-Adjusted Performance

0 of 100

Very Weak

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

Celestica

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Super Micro and Celestica

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

The idea behind Super Micro Computer and Celestica 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.