Correlation Between TDK and Sanmina
Can any of the company-specific risk be diversified away by investing in both TDK and Sanmina 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 TDK and Sanmina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TDK Corporation and Sanmina, you can compare the effects of market volatilities on TDK and Sanmina 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 TDK with a short position of Sanmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of TDK and Sanmina.
Diversification Opportunities for TDK and Sanmina
Poor diversification
The 3 months correlation between TDK and Sanmina is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding TDK Corp. and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina and TDK 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 TDK Corporation are associated (or correlated) with Sanmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanmina has no effect on the direction of TDK i.e., TDK and Sanmina go up and down completely randomly.
Pair Corralation between TDK and Sanmina
Assuming the 90 days horizon TDK is expected to generate 1.15 times less return on investment than Sanmina. But when comparing it to its historical volatility, TDK Corporation is 1.08 times less risky than Sanmina. It trades about 0.08 of its potential returns per unit of risk. Sanmina is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,560 in Sanmina on September 14, 2024 and sell it today you would earn a total of 3,158 from holding Sanmina or generate 69.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
TDK Corp. vs. Sanmina
Performance |
| Timeline |
| TDK Corporation |
| Sanmina |
TDK and Sanmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TDK and Sanmina
The main advantage of trading using opposite TDK and Sanmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TDK position performs unexpectedly, Sanmina 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 Sanmina will offset losses from the drop in Sanmina's long position.| TDK vs. Sunny Optical Technology | TDK vs. Hubbell Incorporated | TDK vs. Superior Plus Corp | TDK vs. SIVERS SEMICONDUCTORS AB |
| Sanmina vs. Datang International Power | Sanmina vs. Japan Asia Investment | Sanmina vs. Chuangs China Investments | Sanmina vs. HK Electric Investments |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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