Correlation Between Snap and Pou Chen
Can any of the company-specific risk be diversified away by investing in both Snap and Pou Chen 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 Pou Chen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Pou Chen Corp, you can compare the effects of market volatilities on Snap and Pou Chen 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 Pou Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Pou Chen.
Diversification Opportunities for Snap and Pou Chen
Very weak diversification
The 3 months correlation between Snap and Pou is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Pou Chen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pou Chen Corp 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 Pou Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pou Chen Corp has no effect on the direction of Snap i.e., Snap and Pou Chen go up and down completely randomly.
Pair Corralation between Snap and Pou Chen
Given the investment horizon of 90 days Snap is expected to generate 1.11 times less return on investment than Pou Chen. In addition to that, Snap is 2.58 times more volatile than Pou Chen Corp. It trades about 0.13 of its total potential returns per unit of risk. Pou Chen Corp is currently generating about 0.38 per unit of volatility. If you would invest 3,755 in Pou Chen Corp on August 24, 2024 and sell it today you would earn a total of 615.00 from holding Pou Chen Corp or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Pou Chen Corp
Performance |
| Timeline |
| Snap Inc |
| Pou Chen Corp |
Snap and Pou Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Pou Chen
The main advantage of trading using opposite Snap and Pou Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Pou Chen 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 Pou Chen will offset losses from the drop in Pou Chen's long position.The idea behind Snap Inc and Pou Chen Corp 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.| Pou Chen vs. Uni President Enterprises Corp | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Far Eastern New | Pou Chen vs. Formosa Chemicals Fibre |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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