Correlation Between Synthomer Plc and Gfinity PLC
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc and Gfinity 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 Synthomer Plc and Gfinity PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and Gfinity PLC, you can compare the effects of market volatilities on Synthomer Plc and Gfinity 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 Synthomer Plc with a short position of Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and Gfinity PLC.
Diversification Opportunities for Synthomer Plc and Gfinity PLC
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Synthomer and Gfinity is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC and Synthomer Plc 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 Synthomer plc are associated (or correlated) with Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Synthomer Plc i.e., Synthomer Plc and Gfinity PLC go up and down completely randomly.
Pair Corralation between Synthomer Plc and Gfinity PLC
Assuming the 90 days trading horizon Synthomer plc is expected to under-perform the Gfinity PLC. But the stock apears to be less risky and, when comparing its historical volatility, Synthomer plc is 7.08 times less risky than Gfinity PLC. The stock trades about -0.4 of its potential returns per unit of risk. The Gfinity PLC is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 4.25 in Gfinity PLC on October 13, 2024 and sell it today you would earn a total of 3.25 from holding Gfinity PLC or generate 76.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 70.0% |
| Values | Daily Returns |
Synthomer plc vs. Gfinity PLC
Performance |
| Timeline |
| Synthomer plc |
| Gfinity PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Synthomer Plc and Gfinity PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthomer Plc and Gfinity PLC
The main advantage of trading using opposite Synthomer Plc and Gfinity PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc position performs unexpectedly, Gfinity 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 Gfinity PLC will offset losses from the drop in Gfinity PLC's long position.| Synthomer Plc vs. Verizon Communications | Synthomer Plc vs. Elmos Semiconductor SE | Synthomer Plc vs. Qurate Retail Series | Synthomer Plc vs. Ross Stores |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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