Correlation Between Townsquare Media and Syntec Optics

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

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

Diversification Opportunities for Townsquare Media and Syntec Optics

0.53

Correlation Coefficient

Townsquare Media  Syntec Optics

Very weak diversification

The 3 months correlation between Townsquare and Syntec is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media 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 Townsquare Media 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 Townsquare Media 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 Townsquare Media i.e., Townsquare Media and Syntec Optics go up and down completely randomly.

Pair Corralation between Townsquare Media and Syntec Optics

Considering the 90-day investment horizon Townsquare Media is expected to generate 0.27 times more return on investment than Syntec Optics. However, Townsquare Media is 3.77 times less risky than Syntec Optics. It trades about -0.13 of its potential returns per unit of risk. Syntec Optics Holdings is currently generating about -0.11 per unit of risk. If you would invest  944.00  in Townsquare Media on December 21, 2024 and sell it today you would lose (158.00) from holding Townsquare Media or give up 16.74% of portfolio value over 90 days.

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

Townsquare Media  vs.  Syntec Optics Holdings

Townsquare Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Townsquare Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Syntec Optics Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Syntec Optics Holdings 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Townsquare Media and Syntec Optics

The main advantage of trading using opposite Townsquare Media and Syntec Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media 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 Townsquare Media 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..