Correlation Between Dada Nexus and Solo Brands
Can any of the company-specific risk be diversified away by investing in both Dada Nexus and Solo Brands 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 Solo Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dada Nexus and Solo Brands, you can compare the effects of market volatilities on Dada Nexus and Solo Brands 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 Solo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dada Nexus and Solo Brands.
Diversification Opportunities for Dada Nexus and Solo Brands
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dada and Solo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dada Nexus and Solo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solo Brands 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 Solo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solo Brands has no effect on the direction of Dada Nexus i.e., Dada Nexus and Solo Brands go up and down completely randomly.
Pair Corralation between Dada Nexus and Solo Brands
Given the investment horizon of 90 days Dada Nexus is expected to under-perform the Solo Brands. But the stock apears to be less risky and, when comparing its historical volatility, Dada Nexus is 1.06 times less risky than Solo Brands. The stock trades about -0.26 of its potential returns per unit of risk. The Solo Brands is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Solo Brands on August 28, 2024 and sell it today you would lose (2.00) from holding Solo Brands or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dada Nexus vs. Solo Brands
Performance |
| Timeline |
| Dada Nexus |
| Solo Brands |
Dada Nexus and Solo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dada Nexus and Solo Brands
The main advantage of trading using opposite Dada Nexus and Solo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dada Nexus position performs unexpectedly, Solo Brands 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 Solo Brands will offset losses from the drop in Solo Brands' 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 |
| Solo Brands vs. Qurate Retail Series | Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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