Correlation Between China Development and Symtek Automation
Can any of the company-specific risk be diversified away by investing in both China Development and Symtek Automation 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 China Development and Symtek Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Financial and Symtek Automation Asia, you can compare the effects of market volatilities on China Development and Symtek Automation 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 China Development with a short position of Symtek Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and Symtek Automation.
Diversification Opportunities for China Development and Symtek Automation
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Symtek is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and Symtek Automation Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symtek Automation Asia and China Development 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 China Development Financial are associated (or correlated) with Symtek Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symtek Automation Asia has no effect on the direction of China Development i.e., China Development and Symtek Automation go up and down completely randomly.
Pair Corralation between China Development and Symtek Automation
Assuming the 90 days trading horizon China Development is expected to generate 3.01 times less return on investment than Symtek Automation. But when comparing it to its historical volatility, China Development Financial is 1.72 times less risky than Symtek Automation. It trades about 0.09 of its potential returns per unit of risk. Symtek Automation Asia is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 11,589 in Symtek Automation Asia on September 1, 2024 and sell it today you would earn a total of 9,611 from holding Symtek Automation Asia or generate 82.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
China Development Financial vs. Symtek Automation Asia
Performance |
| Timeline |
| China Development |
| Symtek Automation Asia |
China Development and Symtek Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and Symtek Automation
The main advantage of trading using opposite China Development and Symtek Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, Symtek Automation 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 Symtek Automation will offset losses from the drop in Symtek Automation's long position.| China Development vs. Central Reinsurance Corp | China Development vs. Huaku Development Co | China Development vs. Fubon Financial Holding |
| Symtek Automation vs. Sunonwealth Electric Machine | Symtek Automation vs. Rechi Precision Co | Symtek Automation vs. Fittech Co | Symtek Automation vs. C Sun Manufacturing |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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