Correlation Between Symphony Environmental and Falcon Oil

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

By analyzing existing cross correlation between Symphony Environmental Technologies and Falcon Oil Gas, you can compare the effects of market volatilities on Symphony Environmental and Falcon Oil 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 Symphony Environmental with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Symphony Environmental and Falcon Oil.

Diversification Opportunities for Symphony Environmental and Falcon Oil

0.76

Correlation Coefficient

Symphony Environmental  Falcon Oil

Poor diversification

The 3 months correlation between Symphony and Falcon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Symphony Environmental Technol and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Symphony Environmental 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 Symphony Environmental Technologies are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Symphony Environmental i.e., Symphony Environmental and Falcon Oil go up and down completely randomly.

Pair Corralation between Symphony Environmental and Falcon Oil

Assuming the 90 days trading horizon Symphony Environmental Technologies is expected to under-perform the Falcon Oil. But the stock apears to be less risky and, when comparing its historical volatility, Symphony Environmental Technologies is 1.01 times less risky than Falcon Oil. The stock trades about -0.14 of its potential returns per unit of risk. The Falcon Oil Gas is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  470.00  in Falcon Oil Gas on October 4, 2024 and sell it today you would lose (25.00) from holding Falcon Oil Gas or give up 5.32% of portfolio value over 90 days.

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

Symphony Environmental Technol  vs.  Falcon Oil Gas

Symphony Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Symphony Environmental Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Falcon Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Falcon Oil is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Symphony Environmental and Falcon Oil

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

The idea behind Symphony Environmental Technologies and Falcon Oil Gas 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.