Correlation Between Snap and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Snap and Nexam Chemical 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 Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Nexam Chemical Holding, you can compare the effects of market volatilities on Snap and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Nexam Chemical.
Diversification Opportunities for Snap and Nexam Chemical
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Snap and Nexam is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Snap i.e., Snap and Nexam Chemical go up and down completely randomly.
Pair Corralation between Snap and Nexam Chemical
Given the investment horizon of 90 days Snap Inc is expected to generate 1.89 times more return on investment than Nexam Chemical. However, Snap is 1.89 times more volatile than Nexam Chemical Holding. It trades about 0.1 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about -0.14 per unit of risk. If you would invest 1,071 in Snap Inc on August 29, 2024 and sell it today you would earn a total of 90.00 from holding Snap Inc or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Nexam Chemical Holding
Performance |
| Timeline |
| Snap Inc |
| Nexam Chemical Holding |
Snap and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Nexam Chemical
The main advantage of trading using opposite Snap and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.The idea behind Snap Inc and Nexam Chemical Holding 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.| Nexam Chemical vs. Bjorn Borg AB | Nexam Chemical vs. Diadrom Holding AB | Nexam Chemical vs. Anoto Group AB | Nexam Chemical vs. Cloetta AB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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