Correlation Between Snap and Thai Oil
Can any of the company-specific risk be diversified away by investing in both Snap and Thai Oil 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 Thai Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Thai Oil Public, you can compare the effects of market volatilities on Snap and Thai Oil 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 Thai Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Thai Oil.
Diversification Opportunities for Snap and Thai Oil
Excellent diversification
The 3 months correlation between Snap and Thai is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public 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 Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Snap i.e., Snap and Thai Oil go up and down completely randomly.
Pair Corralation between Snap and Thai Oil
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Thai Oil. In addition to that, Snap is 2.02 times more volatile than Thai Oil Public. It trades about -0.04 of its total potential returns per unit of risk. Thai Oil Public is currently generating about -0.07 per unit of volatility. If you would invest 4,862 in Thai Oil Public on August 25, 2024 and sell it today you would lose (812.00) from holding Thai Oil Public or give up 16.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.43% |
| Values | Daily Returns |
Snap Inc vs. Thai Oil Public
Performance |
| Timeline |
| Snap Inc |
| Thai Oil Public |
Snap and Thai Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Thai Oil
The main advantage of trading using opposite Snap and Thai Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Thai Oil 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 Thai Oil will offset losses from the drop in Thai Oil's long position.The idea behind Snap Inc and Thai Oil Public 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.| Thai Oil vs. AddTech Hub Public | Thai Oil vs. Premier Marketing Public | Thai Oil vs. Silicon Craft Technology | Thai Oil vs. BPS TECHNOLOGY 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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