Correlation Between Snap and Adecoagro
Can any of the company-specific risk be diversified away by investing in both Snap and Adecoagro 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 Adecoagro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Adecoagro SA, you can compare the effects of market volatilities on Snap and Adecoagro 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 Adecoagro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Adecoagro.
Diversification Opportunities for Snap and Adecoagro
Weak diversification
The 3 months correlation between Snap and Adecoagro is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA 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 Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of Snap i.e., Snap and Adecoagro go up and down completely randomly.
Pair Corralation between Snap and Adecoagro
Given the investment horizon of 90 days Snap Inc is expected to generate 1.75 times more return on investment than Adecoagro. However, Snap is 1.75 times more volatile than Adecoagro SA. It trades about 0.03 of its potential returns per unit of risk. Adecoagro SA is currently generating about 0.05 per unit of risk. If you would invest 930.00 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 230.00 from holding Snap Inc or generate 24.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Adecoagro SA
Performance |
| Timeline |
| Snap Inc |
| Adecoagro SA |
Snap and Adecoagro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Adecoagro
The main advantage of trading using opposite Snap and Adecoagro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Adecoagro 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 Adecoagro will offset losses from the drop in Adecoagro's long position.The idea behind Snap Inc and Adecoagro SA 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.| Adecoagro vs. Bellring Brands LLC | Adecoagro vs. Ingredion Incorporated | Adecoagro vs. Nomad Foods | Adecoagro vs. Simply Good Foods |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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