Correlation Between Super Micro and Quantum

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

Diversification Opportunities for Super Micro and Quantum

-0.13

Correlation Coefficient

Super Micro  Quantum

Good diversification

The 3 months correlation between Super and Quantum is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Quantum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum 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 Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum has no effect on the direction of Super Micro i.e., Super Micro and Quantum go up and down completely randomly.

Pair Corralation between Super Micro and Quantum

Given the investment horizon of 90 days Super Micro Computer is expected to under-perform the Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Super Micro Computer is 3.45 times less risky than Quantum. The stock trades about -0.01 of its potential returns per unit of risk. The Quantum is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  533.00  in Quantum on September 26, 2024 and sell it today you would earn a total of  3,959  from holding Quantum or generate 742.78% 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.  Quantum

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 uncertain fundamental indicators, Super Micro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Quantum

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Super Micro and Quantum

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

The idea behind Super Micro Computer and Quantum 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.