Correlation Between Megachem Public and Synergetic Auto

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

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

Diversification Opportunities for Megachem Public and Synergetic Auto

0.25

Correlation Coefficient

Megachem Public  Synergetic Auto

Modest diversification

The 3 months correlation between Megachem and Synergetic is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Megachem Public and Synergetic Auto Performance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synergetic Auto Perf and Megachem Public 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 Megachem Public are associated (or correlated) with Synergetic Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synergetic Auto Perf has no effect on the direction of Megachem Public i.e., Megachem Public and Synergetic Auto go up and down completely randomly.

Pair Corralation between Megachem Public and Synergetic Auto

Assuming the 90 days trading horizon Megachem Public is expected to generate 0.84 times more return on investment than Synergetic Auto. However, Megachem Public is 1.19 times less risky than Synergetic Auto. It trades about 0.03 of its potential returns per unit of risk. Synergetic Auto Performance is currently generating about -0.03 per unit of risk. If you would invest  168.00  in Megachem Public on April 23, 2025 and sell it today you would earn a total of  4.00  from holding Megachem Public or generate 2.38% return on investment over 90 days.

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

Megachem Public  vs.  Synergetic Auto Performance

Megachem Public

Risk-Adjusted Performance

Weak

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

Synergetic Auto Perf

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Megachem Public and Synergetic Auto

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

The idea behind Megachem Public and Synergetic Auto Performance 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.