Correlation Between Snap and JD

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Can any of the company-specific risk be diversified away by investing in both Snap and JD 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 Snap and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and JD Inc Adr, you can compare the effects of market volatilities on Snap and JD 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 Snap with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and JD.

Diversification Opportunities for Snap and JD

-0.15
  Correlation Coefficient
 JD

Good diversification

The 3 months correlation between Snap and JD is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr and Snap 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 Snap Inc are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of Snap i.e., Snap and JD go up and down completely randomly.

Pair Corralation between Snap and JD

Given the investment horizon of 90 days Snap Inc is expected to generate 0.92 times more return on investment than JD. However, Snap Inc is 1.08 times less risky than JD. It trades about 0.03 of its potential returns per unit of risk. JD Inc Adr is currently generating about -0.04 per unit of risk. If you would invest  1,070  in Snap Inc on September 30, 2024 and sell it today you would earn a total of  29.00  from holding Snap Inc or generate 2.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Snap Inc  vs.  JD Inc Adr

 Performance 
       Timeline  
Snap Inc 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
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 current stock price agitation, may contribute to short-term losses for the retail investors.
JD Inc Adr 

Risk-Adjusted Performance

0 of 100

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

Snap and JD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Snap and JD

The main advantage of trading using opposite Snap and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.
The idea behind Snap Inc and JD Inc Adr 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 the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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