Correlation Between CHINA GAS and Snam Rete

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

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

Diversification Opportunities for CHINA GAS and Snam Rete

-0.08
  Correlation Coefficient
CHINA GAS HOLDINGS
Snam Rete Gas

Good diversification

The 3 months correlation between CHINA and SNMRY is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHINA GAS HOLDINGS and Snam Rete Gas in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Snam Rete Gas and CHINA GAS 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 CHINA GAS HOLDINGS are associated (or correlated) with Snam Rete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam Rete Gas has no effect on the direction of CHINA GAS i.e., CHINA GAS and Snam Rete go up and down completely randomly.

Pair Corralation between CHINA GAS and Snam Rete

Assuming the 90 days horizon CHINA GAS is expected to generate 3.16 times less return on investment than Snam Rete. But when comparing it to its historical volatility, CHINA GAS HOLDINGS is 1.2 times less risky than Snam Rete. It trades about 0.04 of its potential returns per unit of risk. Snam Rete Gas is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,169  in Snam Rete Gas on May 1, 2021 and sell it today you would earn a total of  53.00  from holding Snam Rete Gas or generate 4.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CHINA GAS HOLDINGS  vs.  Snam Rete Gas

 Performance (%) 
      Timeline 
CHINA GAS HOLDINGS 
 CHINA Performance
0 of 100
Over the last 90 days CHINA GAS HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CHINA Price Channel

Snam Rete Gas 
 SNMRY Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Snam Rete Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Snam Rete may actually be approaching a critical reversion point that can send shares even higher in August 2021.

SNMRY Price Channel

CHINA GAS and Snam Rete Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with CHINA GAS and Snam Rete

The main advantage of trading using opposite CHINA GAS and Snam Rete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA GAS position performs unexpectedly, Snam Rete 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 Snam Rete will offset losses from the drop in Snam Rete's long position.
The idea behind CHINA GAS HOLDINGS and Snam Rete Gas 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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