Correlation Between Dada Nexus and Meituan
Can any of the company-specific risk be diversified away by investing in both Dada Nexus and Meituan 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 Meituan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dada Nexus and Meituan, you can compare the effects of market volatilities on Dada Nexus and Meituan 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 Meituan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dada Nexus and Meituan.
Diversification Opportunities for Dada Nexus and Meituan
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dada and Meituan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dada Nexus and Meituan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan 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 Meituan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan has no effect on the direction of Dada Nexus i.e., Dada Nexus and Meituan go up and down completely randomly.
Pair Corralation between Dada Nexus and Meituan
Given the investment horizon of 90 days Dada Nexus is expected to under-perform the Meituan. In addition to that, Dada Nexus is 1.41 times more volatile than Meituan. It trades about -0.03 of its total potential returns per unit of risk. Meituan is currently generating about 0.06 per unit of volatility. If you would invest 1,438 in Meituan on August 25, 2024 and sell it today you would earn a total of 709.00 from holding Meituan or generate 49.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Dada Nexus vs. Meituan
Performance |
| Timeline |
| Dada Nexus |
| Meituan |
Dada Nexus and Meituan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dada Nexus and Meituan
The main advantage of trading using opposite Dada Nexus and Meituan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dada Nexus position performs unexpectedly, Meituan 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 Meituan will offset losses from the drop in Meituan's long position.| Dada Nexus vs. MOGU Inc | Dada Nexus vs. iPower Inc | Dada Nexus vs. Jeffs Brands | Dada Nexus vs. Kidpik Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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