Correlation Between Sanmina and Vicor

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

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

Diversification Opportunities for Sanmina and Vicor

-0.24

Correlation Coefficient

Sanmina  Vicor

Very good diversification

The 3 months correlation between Sanmina and Vicor is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sanmina and Vicor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicor and Sanmina 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 Sanmina are associated (or correlated) with Vicor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicor has no effect on the direction of Sanmina i.e., Sanmina and Vicor go up and down completely randomly.

Pair Corralation between Sanmina and Vicor

Given the investment horizon of 90 days Sanmina is expected to generate 0.78 times more return on investment than Vicor. However, Sanmina is 1.29 times less risky than Vicor. It trades about 0.47 of its potential returns per unit of risk. Vicor is currently generating about 0.3 per unit of risk. If you would invest  6,092  in Sanmina on March 2, 2024 and sell it today you would earn a total of  762.00  from holding Sanmina or generate 12.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sanmina  vs.  Vicor

Sanmina

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sanmina are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sanmina is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Vicor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Vicor is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sanmina and Vicor

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

The idea behind Sanmina and Vicor 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.