Correlation Between SYN Tech and Kunyue Development

Can any of the company-specific risk be diversified away by investing in both SYN Tech and Kunyue Development 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 Kunyue Development 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 Kunyue Development Co, you can compare the effects of market volatilities on SYN Tech and Kunyue Development 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 Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYN Tech and Kunyue Development.

Diversification Opportunities for SYN Tech and Kunyue Development

0.55

Correlation Coefficient

SYN Tech  Kunyue Development

Very weak diversification

The 3 months correlation between SYN and Kunyue is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SYN Tech Chem Pharm and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development 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 Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of SYN Tech i.e., SYN Tech and Kunyue Development go up and down completely randomly.

Pair Corralation between SYN Tech and Kunyue Development

Assuming the 90 days trading horizon SYN Tech Chem Pharm is expected to generate 0.78 times more return on investment than Kunyue Development. However, SYN Tech Chem Pharm is 1.27 times less risky than Kunyue Development. It trades about 0.2 of its potential returns per unit of risk. Kunyue Development Co is currently generating about 0.08 per unit of risk. If you would invest  9,320  in SYN Tech Chem Pharm on December 23, 2024 and sell it today you would earn a total of  1,330  from holding SYN Tech Chem Pharm or generate 14.27% return on investment over 90 days.

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

SYN Tech Chem Pharm  vs.  Kunyue Development Co

SYN Tech Chem

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SYN Tech Chem Pharm are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SYN Tech showed solid returns over the last few months and may actually be approaching a breakup point.

Kunyue Development

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kunyue Development Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kunyue Development may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SYN Tech and Kunyue Development

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

The idea behind SYN Tech Chem Pharm and Kunyue Development Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.