Correlation Between Snap and Know Labs
Can any of the company-specific risk be diversified away by investing in both Snap and Know Labs 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 Know Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Know Labs, you can compare the effects of market volatilities on Snap and Know Labs 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 Know Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Know Labs.
Diversification Opportunities for Snap and Know Labs
Excellent diversification
The 3 months correlation between Snap and Know is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Know Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know Labs 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 Know Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know Labs has no effect on the direction of Snap i.e., Snap and Know Labs go up and down completely randomly.
Pair Corralation between Snap and Know Labs
Given the investment horizon of 90 days Snap is expected to generate 1.11 times less return on investment than Know Labs. But when comparing it to its historical volatility, Snap Inc is 1.07 times less risky than Know Labs. It trades about 0.1 of its potential returns per unit of risk. Know Labs is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Know Labs on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Know Labs or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Know Labs
Performance |
| Timeline |
| Snap Inc |
| Know Labs |
Snap and Know Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Know Labs
The main advantage of trading using opposite Snap and Know Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Know Labs 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 Know Labs will offset losses from the drop in Know Labs' long position.The idea behind Snap Inc and Know Labs 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.| Know Labs vs. Wearable Devices | Know Labs vs. Yoshiharu Global Co | Know Labs vs. bioAffinity Technologies, | Know Labs vs. Jianzhi Education Technology |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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