Correlation Between Symtek Automation and TMP Steel

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

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

Diversification Opportunities for Symtek Automation and TMP Steel

-0.82

Correlation Coefficient

Symtek Automation  TMP Steel

Pay attention - limited upside

The 3 months correlation between Symtek and TMP is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Symtek Automation Asia and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP Steel and Symtek Automation 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 Symtek Automation Asia are associated (or correlated) with TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of Symtek Automation i.e., Symtek Automation and TMP Steel go up and down completely randomly.

Pair Corralation between Symtek Automation and TMP Steel

Assuming the 90 days trading horizon Symtek Automation Asia is expected to generate 3.21 times more return on investment than TMP Steel. However, Symtek Automation is 3.21 times more volatile than TMP Steel. It trades about 0.2 of its potential returns per unit of risk. TMP Steel is currently generating about -0.15 per unit of risk. If you would invest  12,479  in Symtek Automation Asia on September 12, 2024 and sell it today you would earn a total of  6,721  from holding Symtek Automation Asia or generate 53.86% return on investment over 90 days.

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

Symtek Automation Asia  vs.  TMP Steel

Symtek Automation Asia

Risk-Adjusted Performance

15 of 100

Solid

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

TMP Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMP Steel 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.

Pair Trading with Symtek Automation and TMP Steel

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

The idea behind Symtek Automation Asia and TMP Steel 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.