Correlation Between Snam Rete and China Gas

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

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

Diversification Opportunities for Snam Rete and China Gas

-0.3
  Correlation Coefficient
Snam Rete Gas
China Gas Hlds

Very good diversification

The 3 months correlation between SNMRY and China is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Snam Rete Gas and China Gas Hlds in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on China Gas Hlds and Snam Rete 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 Rete Gas 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 Hlds has no effect on the direction of Snam Rete i.e., Snam Rete and China Gas go up and down completely randomly.

Pair Corralation between Snam Rete and China Gas

Assuming the 90 days horizon Snam Rete Gas is expected to generate 0.74 times more return on investment than China Gas. However, Snam Rete Gas is 1.35 times less risky than China Gas. It trades about 0.06 of its potential returns per unit of risk. China Gas Hlds is currently generating about -0.07 per unit of risk. If you would invest  1,095  in Snam Rete Gas on May 1, 2021 and sell it today you would earn a total of  127.00  from holding Snam Rete Gas or generate 11.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Snam Rete Gas  vs.  China Gas Hlds

 Performance (%) 
      Timeline 
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 Hlds 
 China Performance
0 of 100
Over the last 90 days China Gas Hlds 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 rather sound which may send shares a bit higher in August 2021. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

China Price Channel

Snam Rete and China Gas Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Snam Rete and China Gas

The main advantage of trading using opposite Snam Rete and China Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snam Rete 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.
The idea behind Snam Rete Gas and China Gas Hlds 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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