Correlation Between Daishin Balance and Synopex
Can any of the company-specific risk be diversified away by investing in both Daishin Balance 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 Daishin Balance and Synopex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daishin Balance No8 and Synopex, you can compare the effects of market volatilities on Daishin Balance 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 Daishin Balance with a short position of Synopex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and Synopex.
Diversification Opportunities for Daishin Balance and Synopex
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daishin and Synopex is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and Synopex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopex and Daishin Balance 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 Daishin Balance No8 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 Daishin Balance i.e., Daishin Balance and Synopex go up and down completely randomly.
Pair Corralation between Daishin Balance and Synopex
Assuming the 90 days trading horizon Daishin Balance No8 is expected to under-perform the Synopex. But the stock apears to be less risky and, when comparing its historical volatility, Daishin Balance No8 is 1.35 times less risky than Synopex. The stock trades about -0.46 of its potential returns per unit of risk. The Synopex is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 722,000 in Synopex on September 1, 2024 and sell it today you would lose (87,000) from holding Synopex or give up 12.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Daishin Balance No8 vs. Synopex
Performance |
| Timeline |
| Daishin Balance No8 |
| Synopex |
Daishin Balance and Synopex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Balance and Synopex
The main advantage of trading using opposite Daishin Balance and Synopex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Balance 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.| Daishin Balance vs. Semyung Electric Machinery | Daishin Balance vs. Lake Materials Co | Daishin Balance vs. Dongbang Ship Machinery | Daishin Balance vs. Nam Hwa Construction |
| Synopex vs. DataSolution | Synopex vs. Jeong Moon Information | Synopex vs. Pungguk Ethanol Industrial | Synopex vs. Moadata 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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