Correlation Between Supercom and Deluxe
Can any of the company-specific risk be diversified away by investing in both Supercom and Deluxe 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 Supercom and Deluxe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supercom and Deluxe, you can compare the effects of market volatilities on Supercom and Deluxe 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 Supercom with a short position of Deluxe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supercom and Deluxe.
Diversification Opportunities for Supercom and Deluxe
Modest diversification
The 3 months correlation between Supercom and Deluxe is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Supercom and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe and Supercom 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 Supercom are associated (or correlated) with Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of Supercom i.e., Supercom and Deluxe go up and down completely randomly.
Pair Corralation between Supercom and Deluxe
Given the investment horizon of 90 days Supercom is expected to generate 1.5 times less return on investment than Deluxe. In addition to that, Supercom is 1.42 times more volatile than Deluxe. It trades about 0.17 of its total potential returns per unit of risk. Deluxe is currently generating about 0.36 per unit of volatility. If you would invest 1,852 in Deluxe on September 1, 2024 and sell it today you would earn a total of 465.00 from holding Deluxe or generate 25.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supercom vs. Deluxe
Performance |
| Timeline |
| Supercom |
| Deluxe |
Supercom and Deluxe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supercom and Deluxe
The main advantage of trading using opposite Supercom and Deluxe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supercom position performs unexpectedly, Deluxe 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 Deluxe will offset losses from the drop in Deluxe's long position.| Supercom vs. Desktop Metal | Supercom vs. Fabrinet | Supercom vs. Knowles Cor | Supercom vs. Ubiquiti Networks |
| Deluxe vs. Criteo Sa | Deluxe vs. Emerald Expositions Events | Deluxe vs. Marchex | Deluxe vs. Integral Ad Science |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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