Correlation Between Super Micro and Jabil Circuit

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

Diversification Opportunities for Super Micro and Jabil Circuit

0.12

Correlation Coefficient

Super Micro  Jabil Circuit

Average diversification

The 3 months correlation between Super and Jabil is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit 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 Jabil Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jabil Circuit has no effect on the direction of Super Micro i.e., Super Micro and Jabil Circuit go up and down completely randomly.

Pair Corralation between Super Micro and Jabil Circuit

Given the investment horizon of 90 days Super Micro Computer is expected to generate 3.26 times more return on investment than Jabil Circuit. However, Super Micro is 3.26 times more volatile than Jabil Circuit. It trades about 0.06 of its potential returns per unit of risk. Jabil Circuit is currently generating about -0.01 per unit of risk. If you would invest  3,374  in Super Micro Computer on December 26, 2024 and sell it today you would earn a total of  327.00  from holding Super Micro Computer or generate 9.69% return on investment over 90 days.

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

Super Micro Computer  vs.  Jabil Circuit

Super Micro Computer

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Super Micro Computer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Super Micro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Jabil Circuit

Risk-Adjusted Performance

Weak

Over the last 90 days Jabil Circuit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Jabil Circuit is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Super Micro and Jabil Circuit

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

The idea behind Super Micro Computer and Jabil Circuit 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 CEOs Directory module to screen CEOs from public companies around the world.