Correlation Between L3Harris Technologies and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies 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 L3Harris Technologies and Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Synthomer plc, you can compare the effects of market volatilities on L3Harris Technologies 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 L3Harris Technologies with a short position of Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Synthomer Plc.
Diversification Opportunities for L3Harris Technologies and Synthomer Plc
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between L3Harris and Synthomer is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc and L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies i.e., L3Harris Technologies and Synthomer Plc go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Synthomer Plc
Assuming the 90 days trading horizon L3Harris Technologies is expected to generate 0.64 times more return on investment than Synthomer Plc. However, L3Harris Technologies is 1.57 times less risky than Synthomer Plc. It trades about 0.0 of its potential returns per unit of risk. Synthomer plc is currently generating about -0.11 per unit of risk. If you would invest 24,676 in L3Harris Technologies on September 1, 2024 and sell it today you would lose (67.00) from holding L3Harris Technologies or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L3Harris Technologies vs. Synthomer plc
Performance |
| Timeline |
| L3Harris Technologies |
| Synthomer plc |
L3Harris Technologies and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and Synthomer Plc
The main advantage of trading using opposite L3Harris Technologies and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies 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.The idea behind L3Harris Technologies and Synthomer plc 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.
| Synthomer Plc vs. Givaudan SA | Synthomer Plc vs. Antofagasta PLC | Synthomer Plc vs. Centamin PLC | Synthomer Plc vs. Atalaya Mining |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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