Correlation Between Super Micro and Supercom

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

Diversification Opportunities for Super Micro and Supercom

-0.03

Correlation Coefficient

Super Micro  Supercom

Good diversification

The 3 months correlation between Super and Supercom is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom 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 Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Super Micro i.e., Super Micro and Supercom go up and down completely randomly.

Pair Corralation between Super Micro and Supercom

Given the investment horizon of 90 days Super Micro Computer is expected to generate 0.68 times more return on investment than Supercom. However, Super Micro Computer is 1.47 times less risky than Supercom. It trades about 0.07 of its potential returns per unit of risk. Supercom is currently generating about -0.01 per unit of risk. If you would invest  821.00  in Super Micro Computer on September 20, 2024 and sell it today you would earn a total of  2,303  from holding Super Micro Computer or generate 280.51% return on investment over 90 days.

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

Super Micro Computer  vs.  Supercom

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 inconsistent 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.

Supercom

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Supercom is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Super Micro and Supercom

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

The idea behind Super Micro Computer and Supercom 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.