Correlation Between Symphony Environmental and European Metals
Can any of the company-specific risk be diversified away by investing in both Symphony Environmental and European Metals 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 Symphony Environmental and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Symphony Environmental Technologies and European Metals Holdings, you can compare the effects of market volatilities on Symphony Environmental and European Metals 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 Symphony Environmental with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Symphony Environmental and European Metals.
Diversification Opportunities for Symphony Environmental and European Metals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Symphony and European is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Symphony Environmental Technol and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Symphony Environmental 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 Symphony Environmental Technologies are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Symphony Environmental i.e., Symphony Environmental and European Metals go up and down completely randomly.
Pair Corralation between Symphony Environmental and European Metals
Assuming the 90 days trading horizon Symphony Environmental Technologies is expected to generate 1.43 times more return on investment than European Metals. However, Symphony Environmental is 1.43 times more volatile than European Metals Holdings. It trades about -0.02 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.07 per unit of risk. If you would invest 1,050 in Symphony Environmental Technologies on October 16, 2024 and sell it today you would lose (735.00) from holding Symphony Environmental Technologies or give up 70.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Symphony Environmental Technol vs. European Metals Holdings
Performance |
| Timeline |
| Symphony Environmental |
| European Metals Holdings |
Symphony Environmental and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Symphony Environmental and European Metals
The main advantage of trading using opposite Symphony Environmental and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Symphony Environmental position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Symphony Environmental vs. Cairo Communication SpA | Symphony Environmental vs. Ebro Foods | Symphony Environmental vs. Monster Beverage Corp | Symphony Environmental vs. Guild Esports Plc |
| European Metals vs. Premier Foods PLC | European Metals vs. Roebuck Food Group | European Metals vs. Symphony Environmental Technologies | European Metals vs. Associated British Foods |
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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