Correlation Between Systech Bhd and Inix Technologies

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

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

Diversification Opportunities for Systech Bhd and Inix Technologies

0.35

Correlation Coefficient

Systech Bhd  Inix Technologies

Weak diversification

The 3 months correlation between Systech and Inix is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Systech Bhd and Inix Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inix Technologies and Systech Bhd 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 Systech Bhd are associated (or correlated) with Inix Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inix Technologies has no effect on the direction of Systech Bhd i.e., Systech Bhd and Inix Technologies go up and down completely randomly.

Pair Corralation between Systech Bhd and Inix Technologies

Assuming the 90 days trading horizon Systech Bhd is expected to under-perform the Inix Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Systech Bhd is 11.21 times less risky than Inix Technologies. The stock trades about 0.0 of its potential returns per unit of risk. The Inix Technologies Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Inix Technologies Holdings on September 16, 2024 and sell it today you would lose (1.00) from holding Inix Technologies Holdings or give up 66.67% of portfolio value over 90 days.

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

Systech Bhd  vs.  Inix Technologies Holdings

Systech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Systech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Systech Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Inix Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inix Technologies Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Inix Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Systech Bhd and Inix Technologies

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

The idea behind Systech Bhd and Inix Technologies Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.