Correlation Between Synopex and Daewoo SBI

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

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

Diversification Opportunities for Synopex and Daewoo SBI

0.59

Correlation Coefficient

Synopex  Daewoo SBI

Very weak diversification

The 3 months correlation between Synopex and Daewoo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Synopex and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC and Synopex 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 Synopex are associated (or correlated) with Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Synopex i.e., Synopex and Daewoo SBI go up and down completely randomly.

Pair Corralation between Synopex and Daewoo SBI

Assuming the 90 days trading horizon Synopex is expected to under-perform the Daewoo SBI. In addition to that, Synopex is 1.56 times more volatile than Daewoo SBI SPAC. It trades about -0.12 of its total potential returns per unit of risk. Daewoo SBI SPAC is currently generating about -0.03 per unit of volatility. If you would invest  320,000  in Daewoo SBI SPAC on September 29, 2024 and sell it today you would lose (41,500) from holding Daewoo SBI SPAC or give up 12.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Synopex  vs.  Daewoo SBI SPAC

Synopex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synopex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Daewoo SBI SPAC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daewoo SBI SPAC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daewoo SBI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Synopex and Daewoo SBI

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

The idea behind Synopex and Daewoo SBI SPAC 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 Transaction History module to view history of all your transactions and understand their impact on performance.