Correlation Between Xavis and Synopex
Can any of the company-specific risk be diversified away by investing in both Xavis and Synopex 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 Xavis and Synopex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and Synopex, you can compare the effects of market volatilities on Xavis and Synopex 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 Xavis with a short position of Synopex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and Synopex.
Diversification Opportunities for Xavis and Synopex
Very poor diversification
The 3 months correlation between Xavis and Synopex is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and Synopex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopex and Xavis 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 Xavis Co are associated (or correlated) with Synopex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synopex has no effect on the direction of Xavis i.e., Xavis and Synopex go up and down completely randomly.
Pair Corralation between Xavis and Synopex
Assuming the 90 days trading horizon Xavis Co is expected to under-perform the Synopex. But the stock apears to be less risky and, when comparing its historical volatility, Xavis Co is 1.68 times less risky than Synopex. The stock trades about -0.41 of its potential returns per unit of risk. The Synopex is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 718,000 in Synopex on September 3, 2024 and sell it today you would lose (83,000) from holding Synopex or give up 11.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. Synopex
Performance |
| Timeline |
| Xavis |
| Synopex |
Xavis and Synopex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and Synopex
The main advantage of trading using opposite Xavis and Synopex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis position performs unexpectedly, Synopex 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 Synopex will offset losses from the drop in Synopex's long position.| Xavis vs. DSC Investment | Xavis vs. SK Chemicals Co | Xavis vs. Golden Bridge Investment | Xavis vs. Woori Technology Investment |
| Synopex vs. Miwon Chemical | Synopex vs. Innowireless Co | Synopex vs. InnoTherapy | Synopex vs. Youngchang Chemical Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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