Correlation Between Synthomer Plc and Optima Health
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc and Optima Health 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 Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and Optima Health plc, you can compare the effects of market volatilities on Synthomer Plc and Optima Health 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 Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and Optima Health.
Diversification Opportunities for Synthomer Plc and Optima Health
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Synthomer and Optima is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Synthomer Plc i.e., Synthomer Plc and Optima Health go up and down completely randomly.
Pair Corralation between Synthomer Plc and Optima Health
Assuming the 90 days trading horizon Synthomer plc is expected to under-perform the Optima Health. In addition to that, Synthomer Plc is 4.53 times more volatile than Optima Health plc. It trades about -0.11 of its total potential returns per unit of risk. Optima Health plc is currently generating about -0.29 per unit of volatility. If you would invest 16,200 in Optima Health plc on September 1, 2024 and sell it today you would lose (650.00) from holding Optima Health plc or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synthomer plc vs. Optima Health plc
Performance |
| Timeline |
| Synthomer plc |
| Optima Health plc |
Synthomer Plc and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthomer Plc and Optima Health
The main advantage of trading using opposite Synthomer Plc and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.| Synthomer Plc vs. Givaudan SA | Synthomer Plc vs. Antofagasta PLC | Synthomer Plc vs. Centamin PLC | Synthomer Plc vs. Atalaya Mining |
| Optima Health vs. Trainline Plc | Optima Health vs. Allianz Technology Trust | Optima Health vs. Sabien Technology Group | Optima Health vs. Gaztransport et Technigaz |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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