Correlation Between SmartStop Self and Syntec Optics

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

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

Diversification Opportunities for SmartStop Self and Syntec Optics

0.44

Correlation Coefficient

SmartStop Self  Syntec Optics

Very weak diversification

The 3 months correlation between SmartStop and Syntec is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SmartStop Self Storage 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 SmartStop Self 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 SmartStop Self Storage 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 SmartStop Self i.e., SmartStop Self and Syntec Optics go up and down completely randomly.

Pair Corralation between SmartStop Self and Syntec Optics

Assuming the 90 days horizon SmartStop Self is expected to generate 135.03 times less return on investment than Syntec Optics. But when comparing it to its historical volatility, SmartStop Self Storage is 98.08 times less risky than Syntec Optics. It trades about 0.22 of its potential returns per unit of risk. Syntec Optics Holdings is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Syntec Optics Holdings on October 8, 2024 and sell it today you would earn a total of  216.00  from holding Syntec Optics Holdings or generate 232.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

SmartStop Self Storage  vs.  Syntec Optics Holdings

SmartStop Self Storage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, SmartStop Self is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Syntec Optics Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Syntec Optics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SmartStop Self and Syntec Optics

The main advantage of trading using opposite SmartStop Self and Syntec Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartStop Self 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 SmartStop Self Storage 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.

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