Correlation Between Sony Corp and Super Micro

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

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

Diversification Opportunities for Sony Corp and Super Micro

-0.17

Correlation Coefficient

Sony Corp  Super Micro

Good diversification

The 3 months correlation between Sony and Super is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sony Corp 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 Sony Corp 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 Sony Corp 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 Sony Corp i.e., Sony Corp and Super Micro go up and down completely randomly.

Pair Corralation between Sony Corp and Super Micro

Assuming the 90 days horizon Sony Corp is expected to generate 14.48 times more return on investment than Super Micro. However, Sony Corp is 14.48 times more volatile than Super Micro Computer. It trades about 0.15 of its potential returns per unit of risk. Super Micro Computer is currently generating about 0.1 per unit of risk. If you would invest  1,225  in Sony Corp on July 13, 2024 and sell it today you would earn a total of  616.00  from holding Sony Corp or generate 50.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.35%
Values	Daily Returns

Sony Corp  vs.  Super Micro Computer

Sony Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Sony Corp reported 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 uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in November 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Sony Corp and Super Micro

The main advantage of trading using opposite Sony Corp and Super Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Corp 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 Sony Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.