Correlation Between SCB X and Synergetic Auto

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

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

Diversification Opportunities for SCB X and Synergetic Auto

0.18

Correlation Coefficient

SCB X  Synergetic Auto

Average diversification

The 3 months correlation between SCB and Synergetic is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Synergetic Auto Performance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synergetic Auto Perf and SCB X 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 SCB X Public are associated (or correlated) with Synergetic Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synergetic Auto Perf has no effect on the direction of SCB X i.e., SCB X and Synergetic Auto go up and down completely randomly.

Pair Corralation between SCB X and Synergetic Auto

Assuming the 90 days trading horizon SCB X Public is expected to generate 0.24 times more return on investment than Synergetic Auto. However, SCB X Public is 4.24 times less risky than Synergetic Auto. It trades about -0.04 of its potential returns per unit of risk. Synergetic Auto Performance is currently generating about -0.33 per unit of risk. If you would invest  10,600  in SCB X Public on March 7, 2024 and sell it today you would lose (50.00) from holding SCB X Public or give up 0.47% of portfolio value over 90 days.

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

SCB X Public  vs.  Synergetic Auto Performance

SCB X Public

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, SCB X is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Synergetic Auto Perf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synergetic Auto Performance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with SCB X and Synergetic Auto

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

The idea behind SCB X Public and Synergetic Auto Performance 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.