Correlation Between Snap and Incar Financial
Can any of the company-specific risk be diversified away by investing in both Snap and Incar Financial 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 Incar Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Incar Financial Service, you can compare the effects of market volatilities on Snap and Incar Financial 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 Incar Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Incar Financial.
Diversification Opportunities for Snap and Incar Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Incar is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Incar Financial Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incar Financial Service 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 Incar Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incar Financial Service has no effect on the direction of Snap i.e., Snap and Incar Financial go up and down completely randomly.
Pair Corralation between Snap and Incar Financial
Given the investment horizon of 90 days Snap is expected to generate 3.01 times less return on investment than Incar Financial. In addition to that, Snap is 1.04 times more volatile than Incar Financial Service. It trades about 0.07 of its total potential returns per unit of risk. Incar Financial Service is currently generating about 0.22 per unit of volatility. If you would invest 464,000 in Incar Financial Service on August 29, 2024 and sell it today you would earn a total of 152,000 from holding Incar Financial Service or generate 32.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Snap Inc vs. Incar Financial Service
Performance |
| Timeline |
| Snap Inc |
| Incar Financial Service |
Snap and Incar Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Incar Financial
The main advantage of trading using opposite Snap and Incar Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Incar Financial 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 Incar Financial will offset losses from the drop in Incar Financial's long position.The idea behind Snap Inc and Incar Financial Service 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.| Incar Financial vs. Busan Industrial Co | Incar Financial vs. Busan Ind | Incar Financial vs. Shinhan WTI Futures | Incar Financial vs. Finebesteel |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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