Correlation Between Global E and Dada Nexus
Can any of the company-specific risk be diversified away by investing in both Global E and Dada Nexus 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 Global E and Dada Nexus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Online and Dada Nexus, you can compare the effects of market volatilities on Global E and Dada Nexus 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 Global E with a short position of Dada Nexus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Dada Nexus.
Diversification Opportunities for Global E and Dada Nexus
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Dada is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Dada Nexus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dada Nexus and Global E 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 Global E Online are associated (or correlated) with Dada Nexus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dada Nexus has no effect on the direction of Global E i.e., Global E and Dada Nexus go up and down completely randomly.
Pair Corralation between Global E and Dada Nexus
Given the investment horizon of 90 days Global E Online is expected to generate 0.65 times more return on investment than Dada Nexus. However, Global E Online is 1.53 times less risky than Dada Nexus. It trades about 0.41 of its potential returns per unit of risk. Dada Nexus is currently generating about -0.17 per unit of risk. If you would invest 3,921 in Global E Online on August 30, 2024 and sell it today you would earn a total of 1,265 from holding Global E Online or generate 32.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Online vs. Dada Nexus
Performance |
| Timeline |
| Global E Online |
| Dada Nexus |
Global E and Dada Nexus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and Dada Nexus
The main advantage of trading using opposite Global E and Dada Nexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E position performs unexpectedly, Dada Nexus 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 Dada Nexus will offset losses from the drop in Dada Nexus' long position.| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
| Dada Nexus vs. Vipshop Holdings Limited | Dada Nexus vs. JD Inc Adr | Dada Nexus vs. PDD Holdings | Dada Nexus vs. Jumia Technologies AG |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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