Correlation Between Taiga Building and Synex International

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

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

Diversification Opportunities for Taiga Building and Synex International

-0.07

Correlation Coefficient

Taiga Building  Synex International

Good diversification

The 3 months correlation between Taiga and Synex is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Taiga Building Products and Synex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synex International and Taiga Building 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 Taiga Building Products are associated (or correlated) with Synex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synex International has no effect on the direction of Taiga Building i.e., Taiga Building and Synex International go up and down completely randomly.

Pair Corralation between Taiga Building and Synex International

Assuming the 90 days trading horizon Taiga Building Products is expected to under-perform the Synex International. But the stock apears to be less risky and, when comparing its historical volatility, Taiga Building Products is 5.46 times less risky than Synex International. The stock trades about -0.04 of its potential returns per unit of risk. The Synex International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  170.00  in Synex International on December 29, 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

Taiga Building Products  vs.  Synex International

Taiga Building Products

Risk-Adjusted Performance

Very Weak

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

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 unfluctuating forward indicators, Synex International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taiga Building and Synex International

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

The idea behind Taiga Building Products and Synex International 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.