Correlation Between Synthomer Plc and Inspiration Healthcare
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc and Inspiration Healthcare 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 Inspiration Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and Inspiration Healthcare Group, you can compare the effects of market volatilities on Synthomer Plc and Inspiration Healthcare 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 Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and Inspiration Healthcare.
Diversification Opportunities for Synthomer Plc and Inspiration Healthcare
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synthomer and Inspiration is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare 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 Inspiration Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspiration Healthcare has no effect on the direction of Synthomer Plc i.e., Synthomer Plc and Inspiration Healthcare go up and down completely randomly.
Pair Corralation between Synthomer Plc and Inspiration Healthcare
Assuming the 90 days trading horizon Synthomer Plc is expected to generate 7.11 times less return on investment than Inspiration Healthcare. In addition to that, Synthomer Plc is 6.66 times more volatile than Inspiration Healthcare Group. It trades about 0.0 of its total potential returns per unit of risk. Inspiration Healthcare Group is currently generating about 0.22 per unit of volatility. If you would invest 1,250 in Inspiration Healthcare Group on November 3, 2024 and sell it today you would earn a total of 35.00 from holding Inspiration Healthcare Group or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synthomer plc vs. Inspiration Healthcare Group
Performance |
| Timeline |
| Synthomer plc |
| Inspiration Healthcare |
Synthomer Plc and Inspiration Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthomer Plc and Inspiration Healthcare
The main advantage of trading using opposite Synthomer Plc and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc position performs unexpectedly, Inspiration Healthcare 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 Inspiration Healthcare will offset losses from the drop in Inspiration Healthcare's long position.| Synthomer Plc vs. Monster Beverage Corp | Synthomer Plc vs. Fevertree Drinks Plc | Synthomer Plc vs. Roadside Real Estate | Synthomer Plc vs. Cars Inc |
| Inspiration Healthcare vs. Tyson Foods Cl | Inspiration Healthcare vs. National Beverage Corp | Inspiration Healthcare vs. Ebro Foods | Inspiration Healthcare vs. Impax Environmental Markets |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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