Correlation Between Snap and Naspers
Can any of the company-specific risk be diversified away by investing in both Snap and Naspers 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 Naspers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Naspers Limited, you can compare the effects of market volatilities on Snap and Naspers 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 Naspers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Naspers.
Diversification Opportunities for Snap and Naspers
Excellent diversification
The 3 months correlation between Snap and Naspers is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited 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 Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of Snap i.e., Snap and Naspers go up and down completely randomly.
Pair Corralation between Snap and Naspers
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Naspers. In addition to that, Snap is 1.05 times more volatile than Naspers Limited. It trades about -0.04 of its total potential returns per unit of risk. Naspers Limited is currently generating about 0.01 per unit of volatility. If you would invest 17,000 in Naspers Limited on January 17, 2024 and sell it today you would lose (15.00) from holding Naspers Limited or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Snap Inc vs. Naspers Limited
Performance |
| Timeline |
| Snap Inc |
| Naspers Limited |
Snap and Naspers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Naspers
The main advantage of trading using opposite Snap and Naspers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Naspers 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 Naspers will offset losses from the drop in Naspers' long position.The idea behind Snap Inc and Naspers Limited 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.| Naspers vs. Autohome | Naspers vs. Arena Group Holdings | Naspers vs. Asset Entities Class | Naspers vs. DouYu International Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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