Correlation Between Super Micro and EPlus

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

Diversification Opportunities for Super Micro and EPlus

0.47

Correlation Coefficient

Super Micro  EPlus

Very weak diversification

The 3 months correlation between Super and EPlus is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and ePlus inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlus inc 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 EPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlus inc has no effect on the direction of Super Micro i.e., Super Micro and EPlus go up and down completely randomly.

Pair Corralation between Super Micro and EPlus

Given the investment horizon of 90 days Super Micro Computer is expected to generate 3.27 times more return on investment than EPlus. However, Super Micro is 3.27 times more volatile than ePlus inc. It trades about 0.01 of its potential returns per unit of risk. ePlus inc is currently generating about -0.09 per unit of risk. If you would invest  4,491  in Super Micro Computer on September 15, 2024 and sell it today you would lose (846.00) from holding Super Micro Computer or give up 18.84% of portfolio value over 90 days.

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

Super Micro Computer  vs.  ePlus inc

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.

ePlus inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Super Micro and EPlus

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

The idea behind Super Micro Computer and ePlus inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.