Correlation Between Snowflake and AsanaInc

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

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

Diversification Opportunities for Snowflake and AsanaInc

0.81

Correlation Coefficient

Snowflake  AsanaInc

Very poor diversification

The 3 months correlation between Snowflake and AsanaInc is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and AsanaInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AsanaInc and Snowflake 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 Snowflake are associated (or correlated) with AsanaInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AsanaInc has no effect on the direction of Snowflake i.e., Snowflake and AsanaInc go up and down completely randomly.

Pair Corralation between Snowflake and AsanaInc

Given the investment horizon of 90 days Snowflake is expected to generate 1.68 times less return on investment than AsanaInc. But when comparing it to its historical volatility, Snowflake is 1.34 times less risky than AsanaInc. It trades about 0.22 of its potential returns per unit of risk. AsanaInc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,372  in AsanaInc on February 17, 2024 and sell it today you would earn a total of  198.00  from holding AsanaInc or generate 14.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Snowflake  vs.  AsanaInc

Snowflake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snowflake has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

AsanaInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AsanaInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Snowflake and AsanaInc

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

The idea behind Snowflake and AsanaInc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.