Correlation Between Dell Technologies and Super Micro

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

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

Diversification Opportunities for Dell Technologies and Super Micro

-0.63

Correlation Coefficient

Dell Technologies  Super Micro

Excellent diversification

The 3 months correlation between Dell and Super is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Super Micro Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Micro Computer and Dell Technologies 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 Dell Technologies are associated (or correlated) with Super Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Micro Computer has no effect on the direction of Dell Technologies i.e., Dell Technologies and Super Micro go up and down completely randomly.

Pair Corralation between Dell Technologies and Super Micro

Given the investment horizon of 90 days Dell Technologies is expected to under-perform the Super Micro. But the stock apears to be less risky and, when comparing its historical volatility, Dell Technologies is 3.36 times less risky than Super Micro. The stock trades about -0.02 of its potential returns per unit of risk. The Super Micro Computer is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,605  in Super Micro Computer on September 2, 2024 and sell it today you would earn a total of  659.00  from holding Super Micro Computer or generate 25.3% return on investment over 90 days.

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

Dell Technologies  vs.  Super Micro Computer

Dell Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Dell Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong fundamental indicators, Super Micro is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Dell Technologies and Super Micro

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

The idea behind Dell Technologies and Super Micro Computer 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.