Correlation Between SYN Tech and Lung Hwa
Can any of the company-specific risk be diversified away by investing in both SYN Tech and Lung Hwa 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 SYN Tech and Lung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYN Tech Chem Pharm and Lung Hwa Electronics, you can compare the effects of market volatilities on SYN Tech and Lung Hwa 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 SYN Tech with a short position of Lung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYN Tech and Lung Hwa.
Diversification Opportunities for SYN Tech and Lung Hwa
Poor diversification
The 3 months correlation between SYN and Lung is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SYN Tech Chem Pharm and Lung Hwa Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lung Hwa Electronics and SYN Tech 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 SYN Tech Chem Pharm are associated (or correlated) with Lung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lung Hwa Electronics has no effect on the direction of SYN Tech i.e., SYN Tech and Lung Hwa go up and down completely randomly.
Pair Corralation between SYN Tech and Lung Hwa
Assuming the 90 days trading horizon SYN Tech Chem Pharm is expected to generate 0.38 times more return on investment than Lung Hwa. However, SYN Tech Chem Pharm is 2.62 times less risky than Lung Hwa. It trades about -0.05 of its potential returns per unit of risk. Lung Hwa Electronics is currently generating about -0.18 per unit of risk. If you would invest 9,530 in SYN Tech Chem Pharm on October 24, 2024 and sell it today you would lose (300.00) from holding SYN Tech Chem Pharm or give up 3.15% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
SYN Tech Chem Pharm vs. Lung Hwa Electronics
Performance |
Timeline |
SYN Tech Chem |
Lung Hwa Electronics |
SYN Tech and Lung Hwa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SYN Tech and Lung Hwa
The main advantage of trading using opposite SYN Tech and Lung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYN Tech position performs unexpectedly, Lung Hwa 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 Lung Hwa will offset losses from the drop in Lung Hwa's long position.SYN Tech vs. Tung Thih Electronic | SYN Tech vs. Chi Sheng Chemical | SYN Tech vs. Qualipoly Chemical Corp | SYN Tech vs. Formosa Electronic Industries |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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