Correlation Between Snap and CSPC Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Snap and CSPC Pharmaceutical 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 CSPC Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and CSPC Pharmaceutical Group, you can compare the effects of market volatilities on Snap and CSPC Pharmaceutical 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 CSPC Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and CSPC Pharmaceutical.
Diversification Opportunities for Snap and CSPC Pharmaceutical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and CSPC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and CSPC Pharmaceutical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC Pharmaceutical 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 CSPC Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC Pharmaceutical has no effect on the direction of Snap i.e., Snap and CSPC Pharmaceutical go up and down completely randomly.
Pair Corralation between Snap and CSPC Pharmaceutical
Given the investment horizon of 90 days Snap Inc is expected to generate 0.68 times more return on investment than CSPC Pharmaceutical. However, Snap Inc is 1.48 times less risky than CSPC Pharmaceutical. It trades about 0.04 of its potential returns per unit of risk. CSPC Pharmaceutical Group is currently generating about -0.01 per unit of risk. If you would invest 842.00 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 319.00 from holding Snap Inc or generate 37.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 45.94% |
| Values | Daily Returns |
Snap Inc vs. CSPC Pharmaceutical Group
Performance |
| Timeline |
| Snap Inc |
| CSPC Pharmaceutical |
Snap and CSPC Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and CSPC Pharmaceutical
The main advantage of trading using opposite Snap and CSPC Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, CSPC Pharmaceutical 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 CSPC Pharmaceutical will offset losses from the drop in CSPC Pharmaceutical's long position.The idea behind Snap Inc and CSPC Pharmaceutical Group 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.| CSPC Pharmaceutical vs. Ono Pharmaceutical Co | CSPC Pharmaceutical vs. Grifols SA ADR | CSPC Pharmaceutical vs. Pfizer Inc | CSPC Pharmaceutical vs. Northann Corp |
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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