Correlation Between Snap and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Snap and Hang Seng 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 Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Hang Seng Bank, you can compare the effects of market volatilities on Snap and Hang Seng 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 Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Hang Seng.
Diversification Opportunities for Snap and Hang Seng
Very weak diversification
The 3 months correlation between Snap and Hang is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank 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 Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of Snap i.e., Snap and Hang Seng go up and down completely randomly.
Pair Corralation between Snap and Hang Seng
Given the investment horizon of 90 days Snap Inc is expected to generate 2.53 times more return on investment than Hang Seng. However, Snap is 2.53 times more volatile than Hang Seng Bank. It trades about 0.03 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.02 per unit of risk. If you would invest 922.00 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 238.00 from holding Snap Inc or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Hang Seng Bank
Performance |
| Timeline |
| Snap Inc |
| Hang Seng Bank |
Snap and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Hang Seng
The main advantage of trading using opposite Snap and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng's long position.The idea behind Snap Inc and Hang Seng Bank 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.| Hang Seng vs. Caixabank SA ADR | Hang Seng vs. Commercial International Bank | Hang Seng vs. PT Bank Rakyat | Hang Seng vs. Riverview Bancorp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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