Correlation Between Super Micro and Data Storage

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

Diversification Opportunities for Super Micro and Data Storage

0.2

Correlation Coefficient

Super Micro  Data Storage

Modest diversification

The 3 months correlation between Super and Data is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Data Storage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage Corp 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 Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage Corp has no effect on the direction of Super Micro i.e., Super Micro and Data Storage go up and down completely randomly.

Pair Corralation between Super Micro and Data Storage

Given the investment horizon of 90 days Super Micro Computer is expected to generate 0.62 times more return on investment than Data Storage. However, Super Micro Computer is 1.62 times less risky than Data Storage. It trades about 0.22 of its potential returns per unit of risk. Data Storage Corp is currently generating about 0.1 per unit of risk. If you would invest  2,951  in Super Micro Computer on April 20, 2025 and sell it today you would earn a total of  2,324  from holding Super Micro Computer or generate 78.75% return on investment over 90 days.

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

Super Micro Computer  vs.  Data Storage Corp

Super Micro Computer

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Super Micro Computer are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Super Micro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Data Storage Corp

Risk-Adjusted Performance

OK

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

Pair Trading with Super Micro and Data Storage

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

The idea behind Super Micro Computer and Data Storage Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.