Correlation Between Synopsys and Apptech Corp

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Can any of the company-specific risk be diversified away by investing in both Synopsys and Apptech 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 Synopsys and Apptech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synopsys and Apptech Corp, you can compare the effects of market volatilities on Synopsys and Apptech 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 Synopsys with a short position of Apptech Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synopsys and Apptech Corp.

Diversification Opportunities for Synopsys and Apptech Corp

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Synopsys and Apptech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Synopsys and Apptech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apptech Corp and Synopsys 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 Synopsys are associated (or correlated) with Apptech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apptech Corp has no effect on the direction of Synopsys i.e., Synopsys and Apptech Corp go up and down completely randomly.

Pair Corralation between Synopsys and Apptech Corp

Given the investment horizon of 90 days Synopsys is expected to generate 3.58 times less return on investment than Apptech Corp. But when comparing it to its historical volatility, Synopsys is 3.74 times less risky than Apptech Corp. It trades about 0.11 of its potential returns per unit of risk. Apptech Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Apptech Corp on September 2, 2022 and sell it today you would earn a total of  20.00  from holding Apptech Corp or generate 27.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Synopsys  vs.  Apptech Corp

 Performance (%) 
       Timeline  
Synopsys 
Synopsys Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Synopsys are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Synopsys may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Synopsys Price Channel

Apptech Corp 
Apptech Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apptech Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Apptech Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Apptech Price Channel

Synopsys and Apptech Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Synopsys and Apptech Corp

The main advantage of trading using opposite Synopsys and Apptech Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synopsys position performs unexpectedly, Apptech 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 Apptech Corp will offset losses from the drop in Apptech Corp's long position.
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The idea behind Synopsys and Apptech 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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