Correlation Between Snap and Chumporn Palm
Can any of the company-specific risk be diversified away by investing in both Snap and Chumporn Palm 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 Chumporn Palm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Chumporn Palm Oil, you can compare the effects of market volatilities on Snap and Chumporn Palm 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 Chumporn Palm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Chumporn Palm.
Diversification Opportunities for Snap and Chumporn Palm
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Chumporn is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Chumporn Palm Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chumporn Palm Oil 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 Chumporn Palm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chumporn Palm Oil has no effect on the direction of Snap i.e., Snap and Chumporn Palm go up and down completely randomly.
Pair Corralation between Snap and Chumporn Palm
Given the investment horizon of 90 days Snap Inc is expected to generate 2.21 times more return on investment than Chumporn Palm. However, Snap is 2.21 times more volatile than Chumporn Palm Oil. It trades about 0.11 of its potential returns per unit of risk. Chumporn Palm Oil is currently generating about -0.22 per unit of risk. If you would invest 1,045 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 97.00 from holding Snap Inc or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Chumporn Palm Oil
Performance |
| Timeline |
| Snap Inc |
| Chumporn Palm Oil |
Snap and Chumporn Palm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Chumporn Palm
The main advantage of trading using opposite Snap and Chumporn Palm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Chumporn Palm 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 Chumporn Palm will offset losses from the drop in Chumporn Palm's long position.The idea behind Snap Inc and Chumporn Palm Oil 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.| Chumporn Palm vs. CP ALL Public | Chumporn Palm vs. Thai Union Group | Chumporn Palm vs. Minor International Public | Chumporn Palm vs. Central Pattana Public |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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