Correlation Between SNC and LOOM

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

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

Diversification Opportunities for SNC and LOOM

-0.12

Correlation Coefficient

SNC  LOOM

Good diversification

The 3 months correlation between SNC and LOOM is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SNC and LOOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOOM and SNC 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 SNC are associated (or correlated) with LOOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOOM has no effect on the direction of SNC i.e., SNC and LOOM go up and down completely randomly.

Pair Corralation between SNC and LOOM

Assuming the 90 days trading horizon SNC is expected to under-perform the LOOM. But the crypto coin apears to be less risky and, when comparing its historical volatility, SNC is 1.72 times less risky than LOOM. The crypto coin trades about -0.02 of its potential returns per unit of risk. The LOOM is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4.29  in LOOM on September 3, 2024 and sell it today you would earn a total of  3.32  from holding LOOM or generate 77.39% return on investment over 90 days.

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

SNC  vs.  LOOM

SNC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for SNC shareholders.

LOOM

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LOOM are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, LOOM exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SNC and LOOM

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

The idea behind SNC and LOOM 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.