Correlation Between COMPUTERSHARE and Snam SpA

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

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

Diversification Opportunities for COMPUTERSHARE and Snam SpA

0.57

Correlation Coefficient

COMPUTERSHARE  Snam SpA

Very weak diversification

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

Pair Corralation between COMPUTERSHARE and Snam SpA

Assuming the 90 days trading horizon COMPUTERSHARE is expected to generate 2.08 times more return on investment than Snam SpA. However, COMPUTERSHARE is 2.08 times more volatile than Snam SpA. It trades about 0.11 of its potential returns per unit of risk. Snam SpA is currently generating about 0.17 per unit of risk. If you would invest  1,979  in COMPUTERSHARE on December 30, 2024 and sell it today you would earn a total of  341.00  from holding COMPUTERSHARE or generate 17.23% return on investment over 90 days.

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

COMPUTERSHARE  vs.  Snam SpA

COMPUTERSHARE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, COMPUTERSHARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Snam SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snam SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Snam SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMPUTERSHARE and Snam SpA

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

The idea behind COMPUTERSHARE and Snam SpA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.