Correlation Between Opera and Snap

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

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

Diversification Opportunities for Opera and Snap

0.57

Correlation Coefficient

Opera  Snap

Very weak diversification

The 3 months correlation between Opera and Snap is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Opera and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap Inc and Opera 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 Opera are associated (or correlated) with Snap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap Inc has no effect on the direction of Opera i.e., Opera and Snap go up and down completely randomly.

Pair Corralation between Opera and Snap

Given the investment horizon of 90 days Opera is expected to generate 1.07 times more return on investment than Snap. However, Opera is 1.07 times more volatile than Snap Inc. It trades about 0.08 of its potential returns per unit of risk. Snap Inc is currently generating about 0.03 per unit of risk. If you would invest  503.00  in Opera on September 30, 2024 and sell it today you would earn a total of  1,394  from holding Opera or generate 277.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Opera  vs.  Snap Inc

Opera

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opera are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Opera sustained solid returns over the last few months and may actually be approaching a breakup point.

Snap Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Snap Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Snap is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Opera and Snap

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

The idea behind Opera and Snap Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.