Correlation Between Synnex and Eaco Corp

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

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

Diversification Opportunities for Synnex and Eaco Corp

0.36

Correlation Coefficient

Synnex  Eaco Corp

Weak diversification

The 3 months correlation between Synnex and Eaco is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Synnex and Eaco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaco Corp and Synnex 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 Synnex are associated (or correlated) with Eaco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaco Corp has no effect on the direction of Synnex i.e., Synnex and Eaco Corp go up and down completely randomly.

Pair Corralation between Synnex and Eaco Corp

If you would invest  11,060  in Synnex on September 12, 2024 and sell it today you would earn a total of  1,252  from holding Synnex or generate 11.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Synnex  vs.  Eaco Corp

Synnex

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Synnex are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Synnex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaco Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Eaco Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Synnex and Eaco Corp

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

The idea behind Synnex and Eaco Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.