Correlation Between Symphony Environmental and Future Metals
Can any of the company-specific risk be diversified away by investing in both Symphony Environmental and Future 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 Future 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 Future Metals NL, you can compare the effects of market volatilities on Symphony Environmental and Future 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 Future Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Symphony Environmental and Future Metals.
Diversification Opportunities for Symphony Environmental and Future Metals
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Symphony and Future is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Symphony Environmental Technol and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL 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 Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of Symphony Environmental i.e., Symphony Environmental and Future Metals go up and down completely randomly.
Pair Corralation between Symphony Environmental and Future Metals
Assuming the 90 days trading horizon Symphony Environmental Technologies is expected to generate 1.79 times more return on investment than Future Metals. However, Symphony Environmental is 1.79 times more volatile than Future Metals NL. It trades about 0.02 of its potential returns per unit of risk. Future Metals NL is currently generating about -0.1 per unit of risk. If you would invest 325.00 in Symphony Environmental Technologies on November 5, 2024 and sell it today you would earn a total of 0.00 from holding Symphony Environmental Technologies or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Symphony Environmental Technol vs. Future Metals NL
Performance |
| Timeline |
| Symphony Environmental |
| Future Metals NL |
Symphony Environmental and Future Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Symphony Environmental and Future Metals
The main advantage of trading using opposite Symphony Environmental and Future Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Symphony Environmental position performs unexpectedly, Future 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 Future Metals will offset losses from the drop in Future Metals' long position.The idea behind Symphony Environmental Technologies and Future Metals NL 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.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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