Correlation Between Syntec Optics and Awilco Drilling

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

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

Diversification Opportunities for Syntec Optics and Awilco Drilling

-0.5

Correlation Coefficient

Syntec Optics  Awilco Drilling

Very good diversification

The 3 months correlation between Syntec and Awilco is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Syntec Optics Holdings and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC and Syntec Optics 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 Syntec Optics Holdings are associated (or correlated) with Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Syntec Optics i.e., Syntec Optics and Awilco Drilling go up and down completely randomly.

Pair Corralation between Syntec Optics and Awilco Drilling

Given the investment horizon of 90 days Syntec Optics is expected to generate 12.82 times less return on investment than Awilco Drilling. But when comparing it to its historical volatility, Syntec Optics Holdings is 4.44 times less risky than Awilco Drilling. It trades about 0.02 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Awilco Drilling PLC on October 4, 2024 and sell it today you would lose (819.00) from holding Awilco Drilling PLC or give up 81.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Syntec Optics Holdings  vs.  Awilco Drilling PLC

Syntec Optics Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 10 (%) 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.

Awilco Drilling PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Awilco Drilling PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Syntec Optics and Awilco Drilling

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

The idea behind Syntec Optics Holdings and Awilco Drilling PLC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.