Correlation Between China State and SNC Lavalin
Can any of the company-specific risk be diversified away by investing in both China State and SNC Lavalin 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 China State and SNC Lavalin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China State Construction and SNC Lavalin Group, you can compare the effects of market volatilities on China State and SNC Lavalin 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 China State with a short position of SNC Lavalin. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and SNC Lavalin.
Diversification Opportunities for China State and SNC Lavalin
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and SNC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and SNC Lavalin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNC Lavalin Group and China State 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 China State Construction are associated (or correlated) with SNC Lavalin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNC Lavalin Group has no effect on the direction of China State i.e., China State and SNC Lavalin go up and down completely randomly.
Pair Corralation between China State and SNC Lavalin
Assuming the 90 days horizon China State is expected to generate 1.71 times less return on investment than SNC Lavalin. In addition to that, China State is 2.12 times more volatile than SNC Lavalin Group. It trades about 0.03 of its total potential returns per unit of risk. SNC Lavalin Group is currently generating about 0.11 per unit of volatility. If you would invest 2,030 in SNC Lavalin Group on August 31, 2024 and sell it today you would earn a total of 3,255 from holding SNC Lavalin Group or generate 160.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.91% |
| Values | Daily Returns |
China State Construction vs. SNC Lavalin Group
Performance |
| Timeline |
| China State Construction |
| SNC Lavalin Group |
China State and SNC Lavalin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and SNC Lavalin
The main advantage of trading using opposite China State and SNC Lavalin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, SNC Lavalin 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 SNC Lavalin will offset losses from the drop in SNC Lavalin's long position.| China State vs. Orion Group Holdings | China State vs. Agrify Corp | China State vs. Matrix Service Co | China State vs. MYR Group |
| SNC Lavalin vs. Aecon Group | SNC Lavalin vs. Acciona SA | SNC Lavalin vs. WSP Global | SNC Lavalin vs. SIG Combibloc Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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