Correlation Between TE Connectivity and Sanmina

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

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

Diversification Opportunities for TE Connectivity and Sanmina

0.55

Correlation Coefficient

TE Connectivity  Sanmina

Very weak diversification

The 3 months correlation between TEL and Sanmina is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TE Connectivity and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina and TE Connectivity 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 TE Connectivity 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 TE Connectivity i.e., TE Connectivity and Sanmina go up and down completely randomly.

Pair Corralation between TE Connectivity and Sanmina

Considering the 90-day investment horizon TE Connectivity is expected to generate 1.96 times less return on investment than Sanmina. But when comparing it to its historical volatility, TE Connectivity is 1.56 times less risky than Sanmina. It trades about 0.38 of its potential returns per unit of risk. Sanmina is currently generating about 0.47 of returns per unit of risk over similar time horizon. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TE Connectivity  vs.  Sanmina

TE Connectivity

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TE Connectivity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, TE Connectivity is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with TE Connectivity and Sanmina

The main advantage of trading using opposite TE Connectivity and Sanmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TE Connectivity 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.

The idea behind TE Connectivity and Sanmina 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.