Correlation Between International Business and Synchronoss Technologies

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

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

Diversification Opportunities for International Business and Synchronoss Technologies

0.09

Correlation Coefficient

International Business  Synchronoss Technologies

Significant diversification

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

Pair Corralation between International Business and Synchronoss Technologies

Considering the 90-day investment horizon International Business Machines is expected to under-perform the Synchronoss Technologies. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 2.13 times less risky than Synchronoss Technologies. The stock trades about -0.21 of its potential returns per unit of risk. The Synchronoss Technologies is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  986.00  in Synchronoss Technologies on October 5, 2024 and sell it today you would lose (35.00) from holding Synchronoss Technologies or give up 3.55% of portfolio value over 90 days.

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

International Business Machine  vs.  Synchronoss Technologies

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Synchronoss Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synchronoss Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with International Business and Synchronoss Technologies

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

The idea behind International Business Machines and Synchronoss Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.