Correlation Between Symphony Environmental and Trainline Plc

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

Diversification Opportunities for Symphony Environmental and Trainline Plc

-0.35

Correlation Coefficient

Symphony Environmental  Trainline Plc

Very good diversification

The 3 months correlation between Symphony and Trainline is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Symphony Environmental Technol and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline Plc 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Symphony Environmental i.e., Symphony Environmental and Trainline Plc go up and down completely randomly.

Pair Corralation between Symphony Environmental and Trainline Plc

Assuming the 90 days trading horizon Symphony Environmental is expected to generate 33.13 times less return on investment than Trainline Plc. In addition to that, Symphony Environmental is 1.77 times more volatile than Trainline Plc. It trades about 0.0 of its total potential returns per unit of risk. Trainline Plc is currently generating about 0.22 per unit of volatility. If you would invest  32,780  in Trainline Plc on September 12, 2024 and sell it today you would earn a total of  10,560  from holding Trainline Plc or generate 32.21% return on investment over 90 days.

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

Symphony Environmental Technol  vs.  Trainline Plc

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 rather sound technical and fundamental indicators, Symphony Environmental is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Trainline Plc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trainline Plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trainline Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Symphony Environmental and Trainline Plc

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

The idea behind Symphony Environmental Technologies and Trainline Plc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.