Correlation Between Snam SpA and China Gas
Can any of the company-specific risk be diversified away by investing in both Snam SpA and China Gas 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 Snam SpA and China Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snam SpA ADR and China Gas Holdings, you can compare the effects of market volatilities on Snam SpA and China Gas 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 Snam SpA with a short position of China Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snam SpA and China Gas.
Diversification Opportunities for Snam SpA and China Gas
Weak diversification
The 3 months correlation between Snam and China is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Snam SpA ADR and China Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gas Holdings and Snam SpA 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 Snam SpA ADR are associated (or correlated) with China Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gas Holdings has no effect on the direction of Snam SpA i.e., Snam SpA and China Gas go up and down completely randomly.
Pair Corralation between Snam SpA and China Gas
Assuming the 90 days horizon Snam SpA ADR is expected to under-perform the China Gas. But the pink sheet apears to be less risky and, when comparing its historical volatility, Snam SpA ADR is 2.99 times less risky than China Gas. The pink sheet trades about -0.02 of its potential returns per unit of risk. The China Gas Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 79.00 in China Gas Holdings on November 28, 2024 and sell it today you would earn a total of 7.00 from holding China Gas Holdings or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 38.02% |
| Values | Daily Returns |
Snam SpA ADR vs. China Gas Holdings
Performance |
| Timeline |
| Snam SpA ADR |
| China Gas Holdings |
Snam SpA and China Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snam SpA and China Gas
The main advantage of trading using opposite Snam SpA and China Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snam SpA position performs unexpectedly, China Gas 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 China Gas will offset losses from the drop in China Gas' long position.| Snam SpA vs. Northwest Natural Gas | Snam SpA vs. NewJersey Resources | Snam SpA vs. Atmos Energy | Snam SpA vs. Suburban Propane Partners |
| China Gas vs. Games Workshop Group | China Gas vs. Here Media | China Gas vs. Gamehost | China Gas vs. Silicon Gaming |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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