Correlation Between Pets At and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both Pets At 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 Pets At and Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pets at Home and Synthomer plc, you can compare the effects of market volatilities on Pets At 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 Pets At with a short position of Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and Synthomer Plc.
Diversification Opportunities for Pets At and Synthomer Plc
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pets and Synthomer is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc and Pets At 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 Pets at Home 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 Pets At i.e., Pets At and Synthomer Plc go up and down completely randomly.
Pair Corralation between Pets At and Synthomer Plc
Assuming the 90 days trading horizon Pets at Home is expected to generate 0.54 times more return on investment than Synthomer Plc. However, Pets at Home is 1.84 times less risky than Synthomer Plc. It trades about 0.23 of its potential returns per unit of risk. Synthomer plc is currently generating about 0.02 per unit of risk. If you would invest 20,360 in Pets at Home on November 2, 2024 and sell it today you would earn a total of 2,140 from holding Pets at Home or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pets at Home vs. Synthomer plc
Performance |
| Timeline |
| Pets at Home |
| Synthomer plc |
Pets At and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pets At and Synthomer Plc
The main advantage of trading using opposite Pets At and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pets At 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.| Pets At vs. Geely Automobile Holdings | Pets At vs. Naked Wines plc | Pets At vs. PureTech Health plc | Pets At vs. Aeorema Communications Plc |
| Synthomer Plc vs. Fulcrum Metals PLC | Synthomer Plc vs. Adriatic Metals | Synthomer Plc vs. GoldMining | Synthomer Plc vs. Bisichi Mining 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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