Correlation Between Synnex Public and True Public

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

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

Diversification Opportunities for Synnex Public and True Public

0.21

Correlation Coefficient

Synnex Public  True Public

Modest diversification

The 3 months correlation between Synnex and True is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Synnex Public and True Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True Public and Synnex Public 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 Synnex Public are associated (or correlated) with True Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True Public has no effect on the direction of Synnex Public i.e., Synnex Public and True Public go up and down completely randomly.

Pair Corralation between Synnex Public and True Public

Assuming the 90 days trading horizon Synnex Public is expected to generate 1.06 times less return on investment than True Public. In addition to that, Synnex Public is 1.46 times more volatile than True Public. It trades about 0.09 of its total potential returns per unit of risk. True Public is currently generating about 0.13 per unit of volatility. If you would invest  795.00  in True Public on September 16, 2024 and sell it today you would earn a total of  385.00  from holding True Public or generate 48.43% return on investment over 90 days.

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

Synnex Public  vs.  True Public

Synnex Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synnex Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Synnex Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

True Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in True Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, True Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synnex Public and True Public

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

The idea behind Synnex Public and True Public 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.