Correlation Between Super Micro and Ostin Technology

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

Diversification Opportunities for Super Micro and Ostin Technology

0.44

Correlation Coefficient

Super Micro  Ostin Technology

Very weak diversification

The 3 months correlation between Super and Ostin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Ostin Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ostin Technology 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 Ostin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ostin Technology has no effect on the direction of Super Micro i.e., Super Micro and Ostin Technology go up and down completely randomly.

Pair Corralation between Super Micro and Ostin Technology

Given the investment horizon of 90 days Super Micro Computer is expected to under-perform the Ostin Technology. But the stock apears to be less risky and, when comparing its historical volatility, Super Micro Computer is 1.93 times less risky than Ostin Technology. The stock trades about -0.28 of its potential returns per unit of risk. The Ostin Technology Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  197.00  in Ostin Technology Group on October 7, 2024 and sell it today you would earn a total of  50.00  from holding Ostin Technology Group or generate 25.38% return on investment over 90 days.

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

Super Micro Computer  vs.  Ostin Technology Group

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 latest uncertain performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Ostin Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ostin Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Super Micro and Ostin Technology

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

The idea behind Super Micro Computer and Ostin Technology Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.