Correlation Between Snap and Asia Precision
Can any of the company-specific risk be diversified away by investing in both Snap and Asia Precision 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 Asia Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Asia Precision Public, you can compare the effects of market volatilities on Snap and Asia Precision 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 Asia Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Asia Precision.
Diversification Opportunities for Snap and Asia Precision
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Snap and Asia is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Asia Precision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Precision Public 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 Asia Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Precision Public has no effect on the direction of Snap i.e., Snap and Asia Precision go up and down completely randomly.
Pair Corralation between Snap and Asia Precision
Given the investment horizon of 90 days Snap Inc is expected to generate 1.48 times more return on investment than Asia Precision. However, Snap is 1.48 times more volatile than Asia Precision Public. It trades about 0.1 of its potential returns per unit of risk. Asia Precision Public is currently generating about 0.04 per unit of risk. If you would invest 1,071 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Snap Inc or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Asia Precision Public
Performance |
| Timeline |
| Snap Inc |
| Asia Precision Public |
Snap and Asia Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Asia Precision
The main advantage of trading using opposite Snap and Asia Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Asia Precision 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 Asia Precision will offset losses from the drop in Asia Precision's long position.The idea behind Snap Inc and Asia Precision Public 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.| Asia Precision vs. Tata Steel Public | Asia Precision vs. Thaifoods Group Public | Asia Precision vs. TMT Steel Public | Asia Precision vs. The Erawan Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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