Correlation Between Synnex Technology and Powertech Technology

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

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

Diversification Opportunities for Synnex Technology and Powertech Technology

0.09

Correlation Coefficient

Synnex Technology  Powertech Technology

Significant diversification

The 3 months correlation between Synnex and Powertech is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Synnex Technology Internationa and Powertech Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Technology and Synnex Technology 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 Synnex Technology International are associated (or correlated) with Powertech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Technology has no effect on the direction of Synnex Technology i.e., Synnex Technology and Powertech Technology go up and down completely randomly.

Pair Corralation between Synnex Technology and Powertech Technology

Assuming the 90 days trading horizon Synnex Technology International is expected to generate 0.62 times more return on investment than Powertech Technology. However, Synnex Technology International is 1.6 times less risky than Powertech Technology. It trades about -0.03 of its potential returns per unit of risk. Powertech Technology is currently generating about -0.03 per unit of risk. If you would invest  7,220  in Synnex Technology International on December 5, 2024 and sell it today you would lose (380.00) from holding Synnex Technology International or give up 5.26% of portfolio value over 90 days.

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

Synnex Technology Internationa  vs.  Powertech Technology

Synnex Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synnex Technology International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Powertech Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Powertech Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Powertech 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 Synnex Technology and Powertech Technology

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

The idea behind Synnex Technology International and Powertech Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.