Correlation Between International Consolidated and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Synthomer plc, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Synthomer Plc.
Diversification Opportunities for International Consolidated and Synthomer Plc
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and Synthomer is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc and International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Synthomer Plc go up and down completely randomly.
Pair Corralation between International Consolidated and Synthomer Plc
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 0.43 times more return on investment than Synthomer Plc. However, International Consolidated Airlines is 2.33 times less risky than Synthomer Plc. It trades about 0.41 of its potential returns per unit of risk. Synthomer plc is currently generating about 0.06 per unit of risk. If you would invest 29,660 in International Consolidated Airlines on November 6, 2024 and sell it today you would earn a total of 4,130 from holding International Consolidated Airlines or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Synthomer plc
Performance |
| Timeline |
| International Consolidated |
| Synthomer plc |
International Consolidated and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Synthomer Plc
The main advantage of trading using opposite International Consolidated and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Ebro Foods | International Consolidated vs. Eastinco Mining Exploration | International Consolidated vs. Capital Drilling | International Consolidated vs. Odfjell Drilling |
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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 the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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