Correlation Between Super Micro and Data IO

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

Diversification Opportunities for Super Micro and Data IO

-0.35

Correlation Coefficient

Super Micro  Data IO

Very good diversification

The 3 months correlation between Super and Data is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Data IO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data IO 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 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 Super Micro i.e., Super Micro and Data IO go up and down completely randomly.

Pair Corralation between Super Micro and Data IO

Given the investment horizon of 90 days Super Micro Computer is expected to generate 2.72 times more return on investment than Data IO. However, Super Micro is 2.72 times more volatile than Data IO. It trades about 0.04 of its potential returns per unit of risk. Data IO is currently generating about 0.01 per unit of risk. If you would invest  3,159  in Super Micro Computer on September 14, 2024 and sell it today you would earn a total of  487.30  from holding Super Micro Computer or generate 15.43% 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.  Data IO

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.

Data IO

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data IO are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Data IO displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Super Micro and Data IO

The main advantage of trading using opposite Super Micro and Data IO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro 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 Super Micro Computer 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.