Correlation Between Snap and New Advanced
Can any of the company-specific risk be diversified away by investing in both Snap and New Advanced 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 New Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and New Advanced Electronics, you can compare the effects of market volatilities on Snap and New Advanced 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 New Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and New Advanced.
Diversification Opportunities for Snap and New Advanced
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and New is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced 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 New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of Snap i.e., Snap and New Advanced go up and down completely randomly.
Pair Corralation between Snap and New Advanced
Given the investment horizon of 90 days Snap Inc is expected to generate 1.98 times more return on investment than New Advanced. However, Snap is 1.98 times more volatile than New Advanced Electronics. It trades about 0.04 of its potential returns per unit of risk. New Advanced Electronics is currently generating about -0.06 per unit of risk. If you would invest 791.00 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 351.00 from holding Snap Inc or generate 44.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
Snap Inc vs. New Advanced Electronics
Performance |
| Timeline |
| Snap Inc |
| New Advanced Electronics |
Snap and New Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and New Advanced
The main advantage of trading using opposite Snap and New Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, New Advanced 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 New Advanced will offset losses from the drop in New Advanced's long position.The idea behind Snap Inc and New Advanced Electronics 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.| New Advanced vs. Advantech Co | New Advanced vs. IEI Integration Corp | New Advanced vs. Flytech Technology Co | New Advanced vs. ADLINK 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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