Correlation Between Data Communications and Super Micro

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

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

Diversification Opportunities for Data Communications and Super Micro

0.35

Correlation Coefficient

Data Communications  Super Micro

Weak diversification

The 3 months correlation between Data and Super is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Data Communications Management 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 Data Communications 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 Data Communications Management 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 Data Communications i.e., Data Communications and Super Micro go up and down completely randomly.

Pair Corralation between Data Communications and Super Micro

Assuming the 90 days trading horizon Data Communications Management is expected to under-perform the Super Micro. But the stock apears to be less risky and, when comparing its historical volatility, Data Communications Management is 1.96 times less risky than Super Micro. The stock trades about -0.05 of its potential returns per unit of risk. The Super Micro Computer, is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,026  in Super Micro Computer, on July 4, 2025 and sell it today you would lose (1,293) from holding Super Micro Computer, or give up 42.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.64%
Values	Daily Returns

Data Communications Management  vs.  Super Micro Computer,

Data Communications

Risk-Adjusted Performance

Weakest

Over the last 90 days Data Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Super Micro Computer,

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Super Micro Computer, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Super Micro may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Data Communications and Super Micro

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

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.