Correlation Between Snap and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Snap and Miwon Chemical 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 Miwon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Miwon Chemical, you can compare the effects of market volatilities on Snap and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Miwon Chemical.
Diversification Opportunities for Snap and Miwon Chemical
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Miwon is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Snap i.e., Snap and Miwon Chemical go up and down completely randomly.
Pair Corralation between Snap and Miwon Chemical
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Miwon Chemical. In addition to that, Snap is 3.29 times more volatile than Miwon Chemical. It trades about -0.03 of its total potential returns per unit of risk. Miwon Chemical is currently generating about -0.08 per unit of volatility. If you would invest 7,990,000 in Miwon Chemical on September 1, 2024 and sell it today you would lose (140,000) from holding Miwon Chemical or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Miwon Chemical
Performance |
| Timeline |
| Snap Inc |
| Miwon Chemical |
Snap and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Miwon Chemical
The main advantage of trading using opposite Snap and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.The idea behind Snap Inc and Miwon Chemical 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.| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. LIG ES SPAC | Miwon Chemical vs. Youngchang Chemical Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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