Correlation Between Synthomer Plc and Alkemy Capital
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc and Alkemy 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 Synthomer Plc and Alkemy Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and Alkemy Capital Investments, you can compare the effects of market volatilities on Synthomer Plc and Alkemy 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 Synthomer Plc with a short position of Alkemy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and Alkemy Capital.
Diversification Opportunities for Synthomer Plc and Alkemy Capital
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Synthomer and Alkemy is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc and Alkemy Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkemy Capital Inves and Synthomer Plc 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 Synthomer plc are associated (or correlated) with Alkemy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkemy Capital Inves has no effect on the direction of Synthomer Plc i.e., Synthomer Plc and Alkemy Capital go up and down completely randomly.
Pair Corralation between Synthomer Plc and Alkemy Capital
Assuming the 90 days trading horizon Synthomer plc is expected to under-perform the Alkemy Capital. But the stock apears to be less risky and, when comparing its historical volatility, Synthomer plc is 1.82 times less risky than Alkemy Capital. The stock trades about -0.08 of its potential returns per unit of risk. The Alkemy Capital Investments is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 25,000 in Alkemy Capital Investments on October 7, 2024 and sell it today you would lose (11,400) from holding Alkemy Capital Investments or give up 45.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Synthomer plc vs. Alkemy Capital Investments
Performance |
Timeline |
Synthomer plc |
Alkemy Capital Inves |
Synthomer Plc and Alkemy Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Synthomer Plc and Alkemy Capital
The main advantage of trading using opposite Synthomer Plc and Alkemy Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc position performs unexpectedly, Alkemy 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 Alkemy Capital will offset losses from the drop in Alkemy Capital's long position.Synthomer Plc vs. Spire Healthcare Group | Synthomer Plc vs. Cars Inc | Synthomer Plc vs. Cardinal Health | Synthomer Plc vs. Pets at Home |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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