Correlation Between Snap and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Snap and XL Axiata 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 XL Axiata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and XL Axiata Tbk, you can compare the effects of market volatilities on Snap and XL Axiata 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 XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and XL Axiata.
Diversification Opportunities for Snap and XL Axiata
Very good diversification
The 3 months correlation between Snap and PTXKY is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk 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 XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Snap i.e., Snap and XL Axiata go up and down completely randomly.
Pair Corralation between Snap and XL Axiata
Given the investment horizon of 90 days Snap Inc is expected to generate 0.98 times more return on investment than XL Axiata. However, Snap Inc is 1.02 times less risky than XL Axiata. It trades about 0.02 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about 0.01 per unit of risk. If you would invest 1,207 in Snap Inc on August 27, 2024 and sell it today you would lose (65.00) from holding Snap Inc or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
Snap Inc vs. XL Axiata Tbk
Performance |
| Timeline |
| Snap Inc |
| XL Axiata Tbk |
Snap and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and XL Axiata
The main advantage of trading using opposite Snap and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata's long position.The idea behind Snap Inc and XL Axiata Tbk 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.| XL Axiata vs. Vodafone Group PLC | XL Axiata vs. KDDI Corp | XL Axiata vs. Amrica Mvil, SAB | XL Axiata vs. ATT Inc |
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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