Correlation Between Snap and Central Hydropower
Can any of the company-specific risk be diversified away by investing in both Snap and Central Hydropower 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 Central Hydropower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Central Hydropower JSC, you can compare the effects of market volatilities on Snap and Central Hydropower 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 Central Hydropower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Central Hydropower.
Diversification Opportunities for Snap and Central Hydropower
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snap and Central is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Central Hydropower JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Hydropower JSC 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 Central Hydropower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Hydropower JSC has no effect on the direction of Snap i.e., Snap and Central Hydropower go up and down completely randomly.
Pair Corralation between Snap and Central Hydropower
Given the investment horizon of 90 days Snap Inc is expected to generate 8.89 times more return on investment than Central Hydropower. However, Snap is 8.89 times more volatile than Central Hydropower JSC. It trades about 0.08 of its potential returns per unit of risk. Central Hydropower JSC is currently generating about 0.03 per unit of risk. If you would invest 1,089 in Snap Inc on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Snap Inc or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Central Hydropower JSC
Performance |
| Timeline |
| Snap Inc |
| Central Hydropower JSC |
Snap and Central Hydropower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Central Hydropower
The main advantage of trading using opposite Snap and Central Hydropower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Central Hydropower 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 Central Hydropower will offset losses from the drop in Central Hydropower's long position.The idea behind Snap Inc and Central Hydropower JSC 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.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |