Correlation Between SigmaTron International and Data IO

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

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

Diversification Opportunities for SigmaTron International and Data IO

-0.57

Correlation Coefficient

SigmaTron International  Data IO

Excellent diversification

The 3 months correlation between SigmaTron and Data is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SigmaTron International and Data IO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data IO and SigmaTron International 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 SigmaTron International are associated (or correlated) with Data IO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data IO has no effect on the direction of SigmaTron International i.e., SigmaTron International and Data IO go up and down completely randomly.

Pair Corralation between SigmaTron International and Data IO

Given the investment horizon of 90 days SigmaTron International is expected to under-perform the Data IO. In addition to that, SigmaTron International is 1.11 times more volatile than Data IO. It trades about -0.1 of its total potential returns per unit of risk. Data IO is currently generating about 0.09 per unit of volatility. If you would invest  246.00  in Data IO on September 17, 2024 and sell it today you would earn a total of  37.00  from holding Data IO or generate 15.04% return on investment over 90 days.

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

SigmaTron International  vs.  Data IO

SigmaTron International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SigmaTron International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with SigmaTron International and Data IO

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

The idea behind SigmaTron International and Data IO 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.