Correlation Between Chemours and Syntec Optics

Can any of the company-specific risk be diversified away by investing in both Chemours and Syntec Optics 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 Chemours and Syntec Optics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chemours Co and Syntec Optics Holdings, you can compare the effects of market volatilities on Chemours and Syntec Optics 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 Chemours with a short position of Syntec Optics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Syntec Optics.

Diversification Opportunities for Chemours and Syntec Optics

-0.74

Correlation Coefficient

Chemours  Syntec Optics

Pay attention - limited upside

The 3 months correlation between Chemours and Syntec is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Syntec Optics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syntec Optics Holdings and Chemours 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 Chemours Co are associated (or correlated) with Syntec Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syntec Optics Holdings has no effect on the direction of Chemours i.e., Chemours and Syntec Optics go up and down completely randomly.

Pair Corralation between Chemours and Syntec Optics

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Syntec Optics. But the stock apears to be less risky and, when comparing its historical volatility, Chemours Co is 3.15 times less risky than Syntec Optics. The stock trades about -0.02 of its potential returns per unit of risk. The Syntec Optics Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,025  in Syntec Optics Holdings on October 11, 2024 and sell it today you would lose (783.00) from holding Syntec Optics Holdings or give up 76.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Chemours Co  vs.  Syntec Optics Holdings

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Syntec Optics Holdings

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Syntec Optics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemours and Syntec Optics

The main advantage of trading using opposite Chemours and Syntec Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Syntec Optics 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 Syntec Optics will offset losses from the drop in Syntec Optics' long position.

The idea behind Chemours Co and Syntec Optics Holdings 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.