Correlation Between Syntec Optics and PHX Energy

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

Diversification Opportunities for Syntec Optics and PHX Energy

-0.42

Correlation Coefficient

Syntec Optics  PHX Energy

Very good diversification

The 3 months correlation between Syntec and PHX is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Syntec Optics Holdings and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services 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 PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Syntec Optics i.e., Syntec Optics and PHX Energy go up and down completely randomly.

Pair Corralation between Syntec Optics and PHX Energy

Given the investment horizon of 90 days Syntec Optics Holdings is expected to generate 20.11 times more return on investment than PHX Energy. However, Syntec Optics is 20.11 times more volatile than PHX Energy Services. It trades about 0.33 of its potential returns per unit of risk. PHX Energy Services is currently generating about -0.31 per unit of risk. If you would invest  87.00  in Syntec Optics Holdings on September 24, 2024 and sell it today you would earn a total of  263.00  from holding Syntec Optics Holdings or generate 302.3% return on investment over 90 days.

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

Syntec Optics Holdings  vs.  PHX Energy Services

Syntec Optics Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Syntec Optics showed solid returns over the last few months and may actually be approaching a breakup point.

PHX Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHX Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical 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 PHX Energy

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

The idea behind Syntec Optics Holdings and PHX Energy Services 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..