Correlation Between Inventec Corp and Systex Corp

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

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

Diversification Opportunities for Inventec Corp and Systex Corp

0.42

Correlation Coefficient

Inventec Corp  Systex Corp

Very weak diversification

The 3 months correlation between Inventec and Systex is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Inventec Corp and Systex Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systex Corp and Inventec Corp 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 Inventec Corp are associated (or correlated) with Systex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systex Corp has no effect on the direction of Inventec Corp i.e., Inventec Corp and Systex Corp go up and down completely randomly.

Pair Corralation between Inventec Corp and Systex Corp

Assuming the 90 days trading horizon Inventec Corp is expected to generate 0.66 times more return on investment than Systex Corp. However, Inventec Corp is 1.52 times less risky than Systex Corp. It trades about 0.01 of its potential returns per unit of risk. Systex Corp is currently generating about 0.0 per unit of risk. If you would invest  5,210  in Inventec Corp on October 7, 2024 and sell it today you would lose (10.00) from holding Inventec Corp or give up 0.19% of portfolio value over 90 days.

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

Inventec Corp  vs.  Systex Corp

Inventec Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inventec Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Inventec Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Systex Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Systex Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Systex Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Inventec Corp and Systex Corp

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

The idea behind Inventec Corp and Systex Corp 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.