Correlation Between Snap and JD
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
Poor diversification
The 3 months correlation between Snap and JD is 0.74. 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 is expected to generate 3.02 times less return on investment than JD. In addition to that, Snap is 1.31 times more volatile than JD Inc Adr. It trades about 0.01 of its total potential returns per unit of risk. JD Inc Adr is currently generating about 0.05 per unit of volatility. If you would invest 2,670 in JD Inc Adr on August 25, 2024 and sell it today you would earn a total of 798.00 from holding JD Inc Adr or generate 29.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. JD Inc Adr
Performance |
| Timeline |
| Snap Inc |
| JD Inc Adr |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |