Correlation Between Snap and Asiana Airlines
Can any of the company-specific risk be diversified away by investing in both Snap and Asiana Airlines 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 Snap and Asiana Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Asiana Airlines, you can compare the effects of market volatilities on Snap and Asiana Airlines 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 Snap with a short position of Asiana Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Asiana Airlines.
Diversification Opportunities for Snap and Asiana Airlines
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and Asiana is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Asiana Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiana Airlines and Snap 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 Snap Inc are associated (or correlated) with Asiana Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiana Airlines has no effect on the direction of Snap i.e., Snap and Asiana Airlines go up and down completely randomly.
Pair Corralation between Snap and Asiana Airlines
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Asiana Airlines. In addition to that, Snap is 1.43 times more volatile than Asiana Airlines. It trades about -0.03 of its total potential returns per unit of risk. Asiana Airlines is currently generating about 0.14 per unit of volatility. If you would invest 1,009,000 in Asiana Airlines on September 1, 2024 and sell it today you would earn a total of 65,000 from holding Asiana Airlines or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Asiana Airlines
Performance |
| Timeline |
| Snap Inc |
| Asiana Airlines |
Snap and Asiana Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Asiana Airlines
The main advantage of trading using opposite Snap and Asiana Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Asiana Airlines 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 Asiana Airlines will offset losses from the drop in Asiana Airlines' long position.The idea behind Snap Inc and Asiana Airlines 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.| Asiana Airlines vs. Barunson Entertainment Arts | Asiana Airlines vs. DC Media Co | Asiana Airlines vs. ChipsMedia | Asiana Airlines vs. SBI Investment KOREA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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