Correlation Between RCI Hospitality and Syntec Optics

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

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

Diversification Opportunities for RCI Hospitality and Syntec Optics

0.25

Correlation Coefficient

RCI Hospitality  Syntec Optics

Modest diversification

The 3 months correlation between RCI and Syntec is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings 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 RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and Syntec Optics go up and down completely randomly.

Pair Corralation between RCI Hospitality and Syntec Optics

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Syntec Optics. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 4.6 times less risky than Syntec Optics. The stock trades about -0.03 of its potential returns per unit of risk. The Syntec Optics Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Syntec Optics Holdings on September 24, 2024 and sell it today you would lose (650.00) from holding Syntec Optics Holdings or give up 65.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

RCI Hospitality Holdings  vs.  Syntec Optics Holdings

RCI Hospitality Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, RCI Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Syntec Optics Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Syntec Optics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCI Hospitality and Syntec Optics

The main advantage of trading using opposite RCI Hospitality and Syntec Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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 RCI Hospitality Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.