Correlation Between Super Micro and Iveda Solutions

Can any of the company-specific risk be diversified away by investing in both Super Micro and Iveda Solutions 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 Iveda Solutions 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 Iveda Solutions Warrant, you can compare the effects of market volatilities on Super Micro and Iveda Solutions 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 Iveda Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Micro and Iveda Solutions.

Diversification Opportunities for Super Micro and Iveda Solutions

0.54

Correlation Coefficient

Super Micro  Iveda Solutions

Very weak diversification

The 3 months correlation between Super and Iveda is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Iveda Solutions Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions Warrant 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 Iveda Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iveda Solutions Warrant has no effect on the direction of Super Micro i.e., Super Micro and Iveda Solutions go up and down completely randomly.

Pair Corralation between Super Micro and Iveda Solutions

Given the investment horizon of 90 days Super Micro is expected to generate 5.22 times less return on investment than Iveda Solutions. But when comparing it to its historical volatility, Super Micro Computer is 4.35 times less risky than Iveda Solutions. It trades about 0.3 of its potential returns per unit of risk. Iveda Solutions Warrant is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1.39  in Iveda Solutions Warrant on September 14, 2024 and sell it today you would earn a total of  2.65  from holding Iveda Solutions Warrant or generate 190.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	57.14%
Values	Daily Returns

Super Micro Computer  vs.  Iveda Solutions Warrant

Super Micro Computer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Super Micro Computer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Super Micro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Iveda Solutions Warrant

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions Warrant are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Iveda Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Super Micro and Iveda Solutions

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

The idea behind Super Micro Computer and Iveda Solutions Warrant 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.