Correlation Between HIM International and Symtek Automation

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

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

Diversification Opportunities for HIM International and Symtek Automation

0.53

Correlation Coefficient

HIM International  Symtek Automation

Very weak diversification

The 3 months correlation between HIM and Symtek is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HIM International Music 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 HIM International 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 HIM International Music 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 HIM International i.e., HIM International and Symtek Automation go up and down completely randomly.

Pair Corralation between HIM International and Symtek Automation

Assuming the 90 days trading horizon HIM International is expected to generate 7.12 times less return on investment than Symtek Automation. But when comparing it to its historical volatility, HIM International Music is 2.36 times less risky than Symtek Automation. It trades about 0.07 of its potential returns per unit of risk. Symtek Automation Asia is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,479  in Symtek Automation Asia on September 12, 2024 and sell it today you would earn a total of  6,721  from holding Symtek Automation Asia or generate 53.86% return on investment over 90 days.

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

HIM International Music  vs.  Symtek Automation Asia

HIM International Music

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HIM International Music are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, HIM International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Symtek Automation Asia

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Symtek Automation Asia are ranked lower than 15 (%) 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 HIM International and Symtek Automation

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

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..