Correlation Between Snap and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both Snap and Merry Electronics 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 Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Merry Electronics Co, you can compare the effects of market volatilities on Snap and Merry Electronics 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 Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Merry Electronics.
Diversification Opportunities for Snap and Merry Electronics
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Snap and Merry is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics 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 Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of Snap i.e., Snap and Merry Electronics go up and down completely randomly.
Pair Corralation between Snap and Merry Electronics
Given the investment horizon of 90 days Snap Inc is expected to generate 2.37 times more return on investment than Merry Electronics. However, Snap is 2.37 times more volatile than Merry Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Merry Electronics Co is currently generating about -0.06 per unit of risk. If you would invest 1,071 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 90.00 from holding Snap Inc or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Merry Electronics Co
Performance |
| Timeline |
| Snap Inc |
| Merry Electronics |
Snap and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Merry Electronics
The main advantage of trading using opposite Snap and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.The idea behind Snap Inc and Merry Electronics Co 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.| Merry Electronics vs. Chung Hwa Food | Merry Electronics vs. Oceanic Beverages Co | Merry Electronics vs. Alchip Technologies | Merry Electronics vs. United Radiant Technology |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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