Correlation Between Symphony Environmental and Litigation Capital

Can any of the company-specific risk be diversified away by investing in both Symphony Environmental and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Symphony Environmental and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Symphony Environmental and Litigation Capital.

Diversification Opportunities for Symphony Environmental and Litigation Capital

0.6

Correlation Coefficient

Symphony Environmental  Litigation Capital

Poor diversification

The 3 months correlation between Symphony and Litigation is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Symphony Environmental Technol and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Symphony Environmental i.e., Symphony Environmental and Litigation Capital go up and down completely randomly.

Pair Corralation between Symphony Environmental and Litigation Capital

Assuming the 90 days trading horizon Symphony Environmental Technologies is expected to generate 1.38 times more return on investment than Litigation Capital. However, Symphony Environmental is 1.38 times more volatile than Litigation Capital Management. It trades about 0.01 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.16 per unit of risk. If you would invest  315.00  in Symphony Environmental Technologies on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Symphony Environmental Technologies or generate 0.0% return on investment over 90 days.

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

Symphony Environmental Technol  vs.  Litigation Capital Management

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Litigation Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Litigation Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Symphony Environmental and Litigation Capital

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

The idea behind Symphony Environmental Technologies and Litigation Capital Management 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.