Correlation Between Synthomer Plc and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc and Litigation Capital 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 Litigation Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and Litigation Capital Management, you can compare the effects of market volatilities on Synthomer Plc and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and Litigation Capital.
Diversification Opportunities for Synthomer Plc and Litigation Capital
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Synthomer and Litigation is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Synthomer Plc i.e., Synthomer Plc and Litigation Capital go up and down completely randomly.
Pair Corralation between Synthomer Plc and Litigation Capital
Assuming the 90 days trading horizon Synthomer plc is expected to under-perform the Litigation Capital. In addition to that, Synthomer Plc is 1.67 times more volatile than Litigation Capital Management. It trades about -0.08 of its total potential returns per unit of risk. Litigation Capital Management is currently generating about 0.06 per unit of volatility. If you would invest 7,252 in Litigation Capital Management on August 26, 2024 and sell it today you would earn a total of 4,323 from holding Litigation Capital Management or generate 59.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synthomer plc vs. Litigation Capital Management
Performance |
| Timeline |
| Synthomer plc |
| Litigation Capital |
Synthomer Plc and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthomer Plc and Litigation Capital
The main advantage of trading using opposite Synthomer Plc and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Synthomer Plc vs. Givaudan SA | Synthomer Plc vs. Antofagasta PLC | Synthomer Plc vs. Centamin PLC | Synthomer Plc vs. Atalaya Mining |
| Litigation Capital vs. Catalyst Media Group | Litigation Capital vs. Oncimmune Holdings plc | Litigation Capital vs. Invesco Health Care | Litigation Capital vs. Coor Service Management |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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