Correlation Between FXP and SNC

Can any of the company-specific risk be diversified away by investing in both FXP and SNC 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 FXP and SNC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FXP and SNC, you can compare the effects of market volatilities on FXP and SNC 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 FXP with a short position of SNC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FXP and SNC.

Diversification Opportunities for FXP and SNC

0.0

Correlation Coefficient

FXP  SNC

Pay attention - limited upside

The 3 months correlation between FXP and SNC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FXP and SNC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNC and FXP 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 FXP are associated (or correlated) with SNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNC has no effect on the direction of FXP i.e., FXP and SNC go up and down completely randomly.

Pair Corralation between FXP and SNC

If you would invest  5.97  in SNC on January 30, 2024 and sell it today you would earn a total of  0.28  from holding SNC or generate 4.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

FXP  vs.  SNC

FXP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FXP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SNC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SNC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SNC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FXP and SNC

The main advantage of trading using opposite FXP and SNC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FXP position performs unexpectedly, SNC 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 SNC will offset losses from the drop in SNC's long position.

The idea behind FXP and SNC 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.