Correlation Between Honeywell Automation and Syrma SGS

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

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

Diversification Opportunities for Honeywell Automation and Syrma SGS

-0.93

Correlation Coefficient

Honeywell Automation  Syrma SGS

Pay attention - limited upside

The 3 months correlation between Honeywell and Syrma is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell Automation India and Syrma SGS Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syrma SGS Technology and Honeywell 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 Honeywell Automation India are associated (or correlated) with Syrma SGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syrma SGS Technology has no effect on the direction of Honeywell Automation i.e., Honeywell Automation and Syrma SGS go up and down completely randomly.

Pair Corralation between Honeywell Automation and Syrma SGS

Assuming the 90 days trading horizon Honeywell Automation India is expected to generate 0.61 times more return on investment than Syrma SGS. However, Honeywell Automation India is 1.65 times less risky than Syrma SGS. It trades about 0.04 of its potential returns per unit of risk. Syrma SGS Technology is currently generating about 0.02 per unit of risk. If you would invest  3,696,599  in Honeywell Automation India on October 9, 2024 and sell it today you would earn a total of  572,166  from holding Honeywell Automation India or generate 15.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.18%
Values	Daily Returns

Honeywell Automation India  vs.  Syrma SGS Technology

Honeywell Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Honeywell Automation India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Syrma SGS Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syrma SGS Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Syrma SGS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Honeywell Automation and Syrma SGS

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

The idea behind Honeywell Automation India and Syrma SGS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.