Correlation Between Synex International and Fortis Pref

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

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

Diversification Opportunities for Synex International and Fortis Pref

-0.37

Correlation Coefficient

Synex International  Fortis Pref

Very good diversification

The 3 months correlation between Synex and Fortis is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Synex International and Fortis Pref M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Pref M and Synex International 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 Synex International are associated (or correlated) with Fortis Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Pref M has no effect on the direction of Synex International i.e., Synex International and Fortis Pref go up and down completely randomly.

Pair Corralation between Synex International and Fortis Pref

Assuming the 90 days trading horizon Synex International is expected to generate 15.84 times more return on investment than Fortis Pref. However, Synex International is 15.84 times more volatile than Fortis Pref M. It trades about 0.1 of its potential returns per unit of risk. Fortis Pref M is currently generating about 0.08 per unit of risk. If you would invest  170.00  in Synex International on December 31, 2024 and sell it today you would earn a total of  61.00  from holding Synex International or generate 35.88% return on investment over 90 days.

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

Synex International  vs.  Fortis Pref M

Synex International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Synex International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Synex International displayed solid returns over the last few months and may actually be approaching a breakup point.

Fortis Pref M

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Pref M are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fortis Pref is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Synex International and Fortis Pref

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

The idea behind Synex International and Fortis Pref M 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.