Correlation Between Morgan Advanced and Synthomer Plc

Can any of the company-specific risk be diversified away by investing in both Morgan Advanced and Synthomer 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 Morgan Advanced and Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Advanced Materials and Synthomer plc, you can compare the effects of market volatilities on Morgan Advanced and Synthomer 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 Morgan Advanced with a short position of Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Synthomer Plc.

Diversification Opportunities for Morgan Advanced and Synthomer Plc

0.22

Correlation Coefficient

Morgan Advanced  Synthomer Plc

Modest diversification

The 3 months correlation between Morgan and Synthomer is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc and Morgan Advanced 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 Morgan Advanced Materials are associated (or correlated) with Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Synthomer Plc go up and down completely randomly.

Pair Corralation between Morgan Advanced and Synthomer Plc

Assuming the 90 days trading horizon Morgan Advanced Materials is expected to generate 0.46 times more return on investment than Synthomer Plc. However, Morgan Advanced Materials is 2.15 times less risky than Synthomer Plc. It trades about 0.01 of its potential returns per unit of risk. Synthomer plc is currently generating about -0.2 per unit of risk. If you would invest  26,582  in Morgan Advanced Materials on September 23, 2024 and sell it today you would earn a total of  68.00  from holding Morgan Advanced Materials or generate 0.26% return on investment over 90 days.

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

Morgan Advanced Materials  vs.  Synthomer plc

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Morgan Advanced is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Synthomer plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synthomer plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Morgan Advanced and Synthomer Plc

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

The idea behind Morgan Advanced Materials and Synthomer 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.