Correlation Between Meituan ADR and ASOS Plc
Can any of the company-specific risk be diversified away by investing in both Meituan ADR and ASOS Plc 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 Meituan ADR and ASOS Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meituan ADR and ASOS plc PK, you can compare the effects of market volatilities on Meituan ADR and ASOS Plc 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 Meituan ADR with a short position of ASOS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meituan ADR and ASOS Plc.
Diversification Opportunities for Meituan ADR and ASOS Plc
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meituan and ASOS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Meituan ADR and ASOS plc PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS plc PK and Meituan ADR 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 Meituan ADR are associated (or correlated) with ASOS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS plc PK has no effect on the direction of Meituan ADR i.e., Meituan ADR and ASOS Plc go up and down completely randomly.
Pair Corralation between Meituan ADR and ASOS Plc
Assuming the 90 days horizon Meituan ADR is expected to under-perform the ASOS Plc. In addition to that, Meituan ADR is 1.24 times more volatile than ASOS plc PK. It trades about -0.12 of its total potential returns per unit of risk. ASOS plc PK is currently generating about 0.03 per unit of volatility. If you would invest 469.00 in ASOS plc PK on September 1, 2024 and sell it today you would earn a total of 6.00 from holding ASOS plc PK or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Meituan ADR vs. ASOS plc PK
Performance |
| Timeline |
| Meituan ADR |
| ASOS plc PK |
Meituan ADR and ASOS Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meituan ADR and ASOS Plc
The main advantage of trading using opposite Meituan ADR and ASOS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meituan ADR position performs unexpectedly, ASOS Plc 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 ASOS Plc will offset losses from the drop in ASOS Plc's long position.| Meituan ADR vs. PDD Holdings | Meituan ADR vs. JD Inc Adr | Meituan ADR vs. Baozun Inc | Meituan ADR vs. Global E Online |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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