Correlation Between Syntec Optics and Summit Hotel

Can any of the company-specific risk be diversified away by investing in both Syntec Optics and Summit Hotel 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 Summit Hotel 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 Summit Hotel Properties, you can compare the effects of market volatilities on Syntec Optics and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Syntec Optics and Summit Hotel.

Diversification Opportunities for Syntec Optics and Summit Hotel

0.47

Correlation Coefficient

Syntec Optics  Summit Hotel

Very weak diversification

The 3 months correlation between Syntec and Summit is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Syntec Optics Holdings and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Syntec Optics i.e., Syntec Optics and Summit Hotel go up and down completely randomly.

Pair Corralation between Syntec Optics and Summit Hotel

Given the investment horizon of 90 days Syntec Optics Holdings is expected to generate 5.22 times more return on investment than Summit Hotel. However, Syntec Optics is 5.22 times more volatile than Summit Hotel Properties. It trades about 0.01 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.01 per unit of risk. If you would invest  1,015  in Syntec Optics Holdings on October 22, 2024 and sell it today you would lose (823.00) from holding Syntec Optics Holdings or give up 81.08% of portfolio value over 90 days.

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

Syntec Optics Holdings  vs.  Summit Hotel Properties

Syntec Optics Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Syntec Optics showed solid returns over the last few months and may actually be approaching a breakup point.

Summit Hotel Properties

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Summit Hotel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Syntec Optics and Summit Hotel

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

The idea behind Syntec Optics Holdings and Summit Hotel Properties 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.