Correlation Between Lite On and Synnex Technology

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

By analyzing existing cross correlation between Lite On Technology Corp and Synnex Technology International, you can compare the effects of market volatilities on Lite On and Synnex Technology 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 Lite On with a short position of Synnex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Synnex Technology.

Diversification Opportunities for Lite On and Synnex Technology

0.41

Correlation Coefficient

Lite On  Synnex Technology

Very weak diversification

The 3 months correlation between Lite and Synnex is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Synnex Technology Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synnex Technology and Lite On 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 Lite On Technology Corp are associated (or correlated) with Synnex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synnex Technology has no effect on the direction of Lite On i.e., Lite On and Synnex Technology go up and down completely randomly.

Pair Corralation between Lite On and Synnex Technology

Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 1.91 times more return on investment than Synnex Technology. However, Lite On is 1.91 times more volatile than Synnex Technology International. It trades about 0.05 of its potential returns per unit of risk. Synnex Technology International is currently generating about 0.03 per unit of risk. If you would invest  6,547  in Lite On Technology Corp on September 17, 2024 and sell it today you would earn a total of  3,653  from holding Lite On Technology Corp or generate 55.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.78%
Values	Daily Returns

Lite On Technology Corp  vs.  Synnex Technology Internationa

Lite On Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lite On Technology Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lite On is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Synnex Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Synnex Technology International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Synnex Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Lite On and Synnex Technology

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

The idea behind Lite On Technology Corp and Synnex Technology International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.