Correlation Between Castles Technology and Symtek Automation

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

By analyzing existing cross correlation between Castles Technology Co and Symtek Automation Asia, you can compare the effects of market volatilities on Castles Technology 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 Castles Technology with a short position of Symtek Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castles Technology and Symtek Automation.

Diversification Opportunities for Castles Technology and Symtek Automation

-0.46

Correlation Coefficient

Castles Technology  Symtek Automation

Very good diversification

The 3 months correlation between Castles and Symtek is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Castles Technology Co 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 Castles Technology 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 Castles Technology Co 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 Castles Technology i.e., Castles Technology and Symtek Automation go up and down completely randomly.

Pair Corralation between Castles Technology and Symtek Automation

Assuming the 90 days trading horizon Castles Technology Co is expected to under-perform the Symtek Automation. But the stock apears to be less risky and, when comparing its historical volatility, Castles Technology Co is 2.19 times less risky than Symtek Automation. The stock trades about -0.29 of its potential returns per unit of risk. The Symtek Automation Asia is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  21,003  in Symtek Automation Asia on September 30, 2024 and sell it today you would lose (503.00) from holding Symtek Automation Asia or give up 2.39% of portfolio value over 90 days.

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

Castles Technology Co  vs.  Symtek Automation Asia

Castles Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castles Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Symtek Automation Asia

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Symtek Automation Asia are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Symtek Automation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Castles Technology and Symtek Automation

The main advantage of trading using opposite Castles Technology and Symtek Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castles Technology 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.

The idea behind Castles Technology Co and Symtek Automation Asia 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.