Correlation Between Super Micro and TMX Group

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

Diversification Opportunities for Super Micro and TMX Group

0.57

Correlation Coefficient

Super Micro  TMX Group

Very weak diversification

The 3 months correlation between Super and TMX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer, and TMX Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMX Group Limited 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 TMX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMX Group Limited has no effect on the direction of Super Micro i.e., Super Micro and TMX Group go up and down completely randomly.

Pair Corralation between Super Micro and TMX Group

Assuming the 90 days trading horizon Super Micro Computer, is expected to generate 3.64 times more return on investment than TMX Group. However, Super Micro is 3.64 times more volatile than TMX Group Limited. It trades about 0.14 of its potential returns per unit of risk. TMX Group Limited is currently generating about 0.07 per unit of risk. If you would invest  1,215  in Super Micro Computer, on April 25, 2025 and sell it today you would earn a total of  504.00  from holding Super Micro Computer, or generate 41.48% return on investment over 90 days.

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

Super Micro Computer,  vs.  TMX Group Limited

Super Micro Computer,

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Super Micro Computer, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Super Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

TMX Group Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TMX Group Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TMX Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Super Micro and TMX Group

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

The idea behind Super Micro Computer, and TMX Group Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..