Correlation Between Korea Investment and Synopex

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

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

Diversification Opportunities for Korea Investment and Synopex

-0.52

Correlation Coefficient

Korea Investment  Synopex

Excellent diversification

The 3 months correlation between Korea and Synopex is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Korea Investment Holdings and Synopex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopex and Korea Investment 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 Korea Investment Holdings are associated (or correlated) with Synopex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synopex has no effect on the direction of Korea Investment i.e., Korea Investment and Synopex go up and down completely randomly.

Pair Corralation between Korea Investment and Synopex

Assuming the 90 days trading horizon Korea Investment Holdings is expected to under-perform the Synopex. But the stock apears to be less risky and, when comparing its historical volatility, Korea Investment Holdings is 1.86 times less risky than Synopex. The stock trades about -0.02 of its potential returns per unit of risk. The Synopex is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  629,000  in Synopex on September 28, 2024 and sell it today you would earn a total of  71,000  from holding Synopex or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Korea Investment Holdings  vs.  Synopex

Korea Investment Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Investment Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 somewhat strong basic indicators, Synopex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Korea Investment and Synopex

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

The idea behind Korea Investment Holdings and Synopex 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.