Correlation Between Snap and COSMO Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Snap and COSMO Pharmaceuticals 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 COSMO Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and COSMO Pharmaceuticals SA, you can compare the effects of market volatilities on Snap and COSMO Pharmaceuticals 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 COSMO Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and COSMO Pharmaceuticals.
Diversification Opportunities for Snap and COSMO Pharmaceuticals
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Snap and COSMO is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and COSMO Pharmaceuticals SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMO Pharmaceuticals 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 COSMO Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMO Pharmaceuticals has no effect on the direction of Snap i.e., Snap and COSMO Pharmaceuticals go up and down completely randomly.
Pair Corralation between Snap and COSMO Pharmaceuticals
Given the investment horizon of 90 days Snap Inc is expected to generate 3.55 times more return on investment than COSMO Pharmaceuticals. However, Snap is 3.55 times more volatile than COSMO Pharmaceuticals SA. It trades about 0.06 of its potential returns per unit of risk. COSMO Pharmaceuticals SA is currently generating about -0.43 per unit of risk. If you would invest 1,087 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 73.00 from holding Snap Inc or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. COSMO Pharmaceuticals SA
Performance |
| Timeline |
| Snap Inc |
| COSMO Pharmaceuticals |
Snap and COSMO Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and COSMO Pharmaceuticals
The main advantage of trading using opposite Snap and COSMO Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, COSMO Pharmaceuticals 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 COSMO Pharmaceuticals will offset losses from the drop in COSMO Pharmaceuticals' long position.The idea behind Snap Inc and COSMO Pharmaceuticals 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.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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