Correlation Between Sun Country and Syntec Optics

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

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

Diversification Opportunities for Sun Country and Syntec Optics

0.19

Correlation Coefficient

Sun Country  Syntec Optics

Average diversification

The 3 months correlation between Sun and Syntec is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines 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 Sun Country 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 Sun Country Airlines 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 Sun Country i.e., Sun Country and Syntec Optics go up and down completely randomly.

Pair Corralation between Sun Country and Syntec Optics

Given the investment horizon of 90 days Sun Country is expected to generate 29.62 times less return on investment than Syntec Optics. But when comparing it to its historical volatility, Sun Country Airlines is 13.25 times less risky than Syntec Optics. It trades about 0.14 of its potential returns per unit of risk. Syntec Optics Holdings is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Syntec Optics Holdings on September 26, 2024 and sell it today you would earn a total of  251.00  from holding Syntec Optics Holdings or generate 288.51% return on investment over 90 days.

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

Sun Country Airlines  vs.  Syntec Optics Holdings

Sun Country Airlines

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Sun Country and Syntec Optics

The main advantage of trading using opposite Sun Country and Syntec Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country 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 Sun Country Airlines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.