Correlation Between SNC and Polygon

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

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

Diversification Opportunities for SNC and Polygon

0.28

Correlation Coefficient

SNC  Polygon

Modest diversification

The 3 months correlation between SNC and Polygon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SNC and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon 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 Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of SNC i.e., SNC and Polygon go up and down completely randomly.

Pair Corralation between SNC and Polygon

Assuming the 90 days trading horizon SNC is expected to under-perform the Polygon. But the crypto coin apears to be less risky and, when comparing its historical volatility, SNC is 1.13 times less risky than Polygon. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Polygon is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Polygon on September 3, 2024 and sell it today you would earn a total of  22.00  from holding Polygon or generate 57.89% return on investment over 90 days.

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

SNC  vs.  Polygon

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.

Polygon

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Polygon exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SNC and Polygon

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

The idea behind SNC and Polygon 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.