Correlation Between Snap and JTL Industries

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

Diversification Opportunities for Snap and JTL Industries

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Snap and JTL is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and JTL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JTL Industries 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 JTL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JTL Industries has no effect on the direction of Snap i.e., Snap and JTL Industries go up and down completely randomly.

Pair Corralation between Snap and JTL Industries

Given the investment horizon of 90 days Snap Inc is expected to generate 0.26 times more return on investment than JTL Industries. However, Snap Inc is 3.81 times less risky than JTL Industries. It trades about -0.03 of its potential returns per unit of risk. JTL Industries is currently generating about -0.18 per unit of risk. If you would invest  1,216  in Snap Inc on September 1, 2024 and sell it today you would lose (35.00) from holding Snap Inc or give up 2.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Snap Inc  vs.  JTL Industries

 Performance 
       Timeline  
Snap Inc 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Snap Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Snap reported solid returns over the last few months and may actually be approaching a breakup point.
JTL Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JTL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Snap and JTL Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Snap and JTL Industries

The main advantage of trading using opposite Snap and JTL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, JTL Industries 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 JTL Industries will offset losses from the drop in JTL Industries' long position.
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The idea behind Snap Inc and JTL Industries 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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