Correlation Between Snap and Powercell Sweden
Can any of the company-specific risk be diversified away by investing in both Snap and Powercell Sweden 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 Powercell Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Powercell Sweden, you can compare the effects of market volatilities on Snap and Powercell Sweden 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 Powercell Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Powercell Sweden.
Diversification Opportunities for Snap and Powercell Sweden
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Powercell is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden 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 Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of Snap i.e., Snap and Powercell Sweden go up and down completely randomly.
Pair Corralation between Snap and Powercell Sweden
Given the investment horizon of 90 days Snap Inc is expected to generate 0.7 times more return on investment than Powercell Sweden. However, Snap Inc is 1.43 times less risky than Powercell Sweden. It trades about -0.03 of its potential returns per unit of risk. Powercell Sweden is currently generating about -0.13 per unit of risk. If you would invest 1,216 in Snap Inc on September 1, 2024 and sell it today you would lose (35.00) from holding Snap Inc or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Powercell Sweden
Performance |
| Timeline |
| Snap Inc |
| Powercell Sweden |
Snap and Powercell Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Powercell Sweden
The main advantage of trading using opposite Snap and Powercell Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Powercell Sweden 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 Powercell Sweden will offset losses from the drop in Powercell Sweden's long position.The idea behind Snap Inc and Powercell Sweden 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.| Powercell Sweden vs. Strategic Investments AS | Powercell Sweden vs. CVW CLEANTECH INC | Powercell Sweden vs. MARKET VECTR RETAIL | Powercell Sweden vs. AOYAMA TRADING |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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