Correlation Between Dada Nexus and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Dada Nexus and Alibaba Group 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 Dada Nexus and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dada Nexus and Alibaba Group Holding, you can compare the effects of market volatilities on Dada Nexus and Alibaba Group 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 Dada Nexus with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dada Nexus and Alibaba Group.
Diversification Opportunities for Dada Nexus and Alibaba Group
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dada and Alibaba is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dada Nexus and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Dada Nexus 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 Dada Nexus are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Dada Nexus i.e., Dada Nexus and Alibaba Group go up and down completely randomly.
Pair Corralation between Dada Nexus and Alibaba Group
Given the investment horizon of 90 days Dada Nexus is expected to under-perform the Alibaba Group. In addition to that, Dada Nexus is 2.26 times more volatile than Alibaba Group Holding. It trades about -0.17 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.28 per unit of volatility. If you would invest 9,983 in Alibaba Group Holding on August 30, 2024 and sell it today you would lose (1,324) from holding Alibaba Group Holding or give up 13.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dada Nexus vs. Alibaba Group Holding
Performance |
| Timeline |
| Dada Nexus |
| Alibaba Group Holding |
Dada Nexus and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dada Nexus and Alibaba Group
The main advantage of trading using opposite Dada Nexus and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dada Nexus position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Dada Nexus vs. Vipshop Holdings Limited | Dada Nexus vs. JD Inc Adr | Dada Nexus vs. PDD Holdings | Dada Nexus vs. Jumia Technologies AG |
| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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