Correlation Between Data IO and Sanmina

Can any of the company-specific risk be diversified away by investing in both Data IO and Sanmina 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 Data IO and Sanmina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Data IO and Sanmina, you can compare the effects of market volatilities on Data IO and Sanmina 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 Data IO with a short position of Sanmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data IO and Sanmina.

Diversification Opportunities for Data IO and Sanmina

0.64

Correlation Coefficient

Data IO  Sanmina

Poor diversification

The 3 months correlation between Data and Sanmina is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Data IO and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina and Data IO 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 Data IO are associated (or correlated) with Sanmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanmina has no effect on the direction of Data IO i.e., Data IO and Sanmina go up and down completely randomly.

Pair Corralation between Data IO and Sanmina

Given the investment horizon of 90 days Data IO is expected to generate 1.02 times less return on investment than Sanmina. In addition to that, Data IO is 1.43 times more volatile than Sanmina. It trades about 0.09 of its total potential returns per unit of risk. Sanmina is currently generating about 0.13 per unit of volatility. If you would invest  6,850  in Sanmina on September 17, 2024 and sell it today you would earn a total of  1,173  from holding Sanmina or generate 17.12% return on investment over 90 days.

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

Data IO  vs.  Sanmina

Data IO

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Data IO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Data IO displayed solid returns over the last few months and may actually be approaching a breakup point.

Sanmina

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sanmina are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Sanmina displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data IO and Sanmina

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

The idea behind Data IO and Sanmina 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.