Correlation Between Oriental Union and Synmosa Biopharma

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Can any of the company-specific risk be diversified away by investing in both Oriental Union and Synmosa Biopharma 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 Oriental Union and Synmosa Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Union Chemical and Synmosa Biopharma, you can compare the effects of market volatilities on Oriental Union and Synmosa Biopharma 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 Oriental Union with a short position of Synmosa Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Union and Synmosa Biopharma.

Diversification Opportunities for Oriental Union and Synmosa Biopharma

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Oriental and Synmosa is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Union Chemical and Synmosa Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synmosa Biopharma and Oriental Union 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 Oriental Union Chemical are associated (or correlated) with Synmosa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synmosa Biopharma has no effect on the direction of Oriental Union i.e., Oriental Union and Synmosa Biopharma go up and down completely randomly.

Pair Corralation between Oriental Union and Synmosa Biopharma

Assuming the 90 days trading horizon Oriental Union Chemical is expected to under-perform the Synmosa Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Oriental Union Chemical is 1.08 times less risky than Synmosa Biopharma. The stock trades about -0.43 of its potential returns per unit of risk. The Synmosa Biopharma is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  3,655  in Synmosa Biopharma on September 5, 2024 and sell it today you would lose (230.00) from holding Synmosa Biopharma or give up 6.29% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Oriental Union Chemical  vs.  Synmosa Biopharma

 Performance 
       Timeline  
Oriental Union Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oriental Union Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Synmosa Biopharma 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Synmosa Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Oriental Union and Synmosa Biopharma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oriental Union and Synmosa Biopharma

The main advantage of trading using opposite Oriental Union and Synmosa Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Union position performs unexpectedly, Synmosa Biopharma 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 Synmosa Biopharma will offset losses from the drop in Synmosa Biopharma's long position.
The idea behind Oriental Union Chemical and Synmosa Biopharma 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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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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