Correlation Between Cars and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both Cars and Synthomer Plc 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 Cars and Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Synthomer plc, you can compare the effects of market volatilities on Cars and Synthomer Plc 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 Cars with a short position of Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Synthomer Plc.
Diversification Opportunities for Cars and Synthomer Plc
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cars and Synthomer is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc and Cars 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 Cars Inc are associated (or correlated) with Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of Cars i.e., Cars and Synthomer Plc go up and down completely randomly.
Pair Corralation between Cars and Synthomer Plc
Assuming the 90 days trading horizon Cars Inc is expected to generate 0.9 times more return on investment than Synthomer Plc. However, Cars Inc is 1.11 times less risky than Synthomer Plc. It trades about 0.02 of its potential returns per unit of risk. Synthomer plc is currently generating about -0.09 per unit of risk. If you would invest 1,713 in Cars Inc on October 23, 2024 and sell it today you would lose (27.00) from holding Cars Inc or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.33% |
| Values | Daily Returns |
Cars Inc vs. Synthomer plc
Performance |
| Timeline |
| Cars Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Synthomer plc |
Cars and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Synthomer Plc
The main advantage of trading using opposite Cars and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Synthomer Plc 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 Synthomer Plc will offset losses from the drop in Synthomer Plc's long position.| Cars vs. Mobile Tornado Group | Cars vs. Darden Restaurants | Cars vs. Medical Properties Trust | Cars vs. Naked Wines plc |
| Synthomer Plc vs. Roebuck Food Group | Synthomer Plc vs. Symphony Environmental Technologies | Synthomer Plc vs. Odfjell Drilling | Synthomer Plc vs. Pressure Technologies Plc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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