Correlation Between TMT Steel and Synergetic Auto

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

By analyzing existing cross correlation between TMT Steel Public and Synergetic Auto Performance, you can compare the effects of market volatilities on TMT Steel and Synergetic Auto 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 TMT Steel with a short position of Synergetic Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and Synergetic Auto.

Diversification Opportunities for TMT Steel and Synergetic Auto

0.89

Correlation Coefficient

TMT Steel  Synergetic Auto

Very poor diversification

The 3 months correlation between TMT and Synergetic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and Synergetic Auto Performance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synergetic Auto Perf and TMT Steel 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 TMT Steel Public are associated (or correlated) with Synergetic Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synergetic Auto Perf has no effect on the direction of TMT Steel i.e., TMT Steel and Synergetic Auto go up and down completely randomly.

Pair Corralation between TMT Steel and Synergetic Auto

Assuming the 90 days trading horizon TMT Steel Public is expected to under-perform the Synergetic Auto. But the stock apears to be less risky and, when comparing its historical volatility, TMT Steel Public is 2.22 times less risky than Synergetic Auto. The stock trades about -0.6 of its potential returns per unit of risk. The Synergetic Auto Performance is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  236.00  in Synergetic Auto Performance on October 10, 2024 and sell it today you would lose (52.00) from holding Synergetic Auto Performance or give up 22.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.31%
Values	Daily Returns

TMT Steel Public  vs.  Synergetic Auto Performance

TMT Steel Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMT Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Synergetic Auto Perf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synergetic Auto Performance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with TMT Steel and Synergetic Auto

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

The idea behind TMT Steel Public and Synergetic Auto Performance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..