Correlation Between Synthetic Products and Matco Foods
Can any of the company-specific risk be diversified away by investing in both Synthetic Products and Matco Foods 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 Synthetic Products and Matco Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthetic Products Enterprises and Matco Foods, you can compare the effects of market volatilities on Synthetic Products and Matco Foods 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 Synthetic Products with a short position of Matco Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthetic Products and Matco Foods.
Diversification Opportunities for Synthetic Products and Matco Foods
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Synthetic and Matco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Synthetic Products Enterprises and Matco Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matco Foods and Synthetic Products 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 Synthetic Products Enterprises are associated (or correlated) with Matco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matco Foods has no effect on the direction of Synthetic Products i.e., Synthetic Products and Matco Foods go up and down completely randomly.
Pair Corralation between Synthetic Products and Matco Foods
Assuming the 90 days trading horizon Synthetic Products Enterprises is expected to under-perform the Matco Foods. In addition to that, Synthetic Products is 1.51 times more volatile than Matco Foods. It trades about -0.07 of its total potential returns per unit of risk. Matco Foods is currently generating about 0.05 per unit of volatility. If you would invest 2,762 in Matco Foods on August 25, 2024 and sell it today you would earn a total of 170.00 from holding Matco Foods or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synthetic Products Enterprises vs. Matco Foods
Performance |
| Timeline |
| Synthetic Products |
| Matco Foods |
Synthetic Products and Matco Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthetic Products and Matco Foods
The main advantage of trading using opposite Synthetic Products and Matco Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthetic Products position performs unexpectedly, Matco Foods 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 Matco Foods will offset losses from the drop in Matco Foods' long position.| Synthetic Products vs. Matco Foods | Synthetic Products vs. Sitara Chemical Industries | Synthetic Products vs. Lotte Chemical Pakistan | Synthetic Products vs. Ghandhara Automobile |
| Matco Foods vs. Masood Textile Mills | Matco Foods vs. Fauji Foods | Matco Foods vs. KSB Pumps | Matco Foods vs. Mari Petroleum |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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