Correlation Between Meituan ADR and Redbubble
Can any of the company-specific risk be diversified away by investing in both Meituan ADR and Redbubble 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 Redbubble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meituan ADR and Redbubble Limited, you can compare the effects of market volatilities on Meituan ADR and Redbubble 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 Redbubble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meituan ADR and Redbubble.
Diversification Opportunities for Meituan ADR and Redbubble
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meituan and Redbubble is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Meituan ADR and Redbubble Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redbubble Limited 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 Redbubble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redbubble Limited has no effect on the direction of Meituan ADR i.e., Meituan ADR and Redbubble go up and down completely randomly.
Pair Corralation between Meituan ADR and Redbubble
Assuming the 90 days horizon Meituan ADR is expected to under-perform the Redbubble. But the pink sheet apears to be less risky and, when comparing its historical volatility, Meituan ADR is 1.54 times less risky than Redbubble. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Redbubble Limited is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Redbubble Limited on August 28, 2024 and sell it today you would lose (3.00) from holding Redbubble Limited or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meituan ADR vs. Redbubble Limited
Performance |
| Timeline |
| Meituan ADR |
| Redbubble Limited |
Meituan ADR and Redbubble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meituan ADR and Redbubble
The main advantage of trading using opposite Meituan ADR and Redbubble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meituan ADR position performs unexpectedly, Redbubble 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 Redbubble will offset losses from the drop in Redbubble's long position.| Meituan ADR vs. 1StdibsCom | Meituan ADR vs. Natural Health Trend | Meituan ADR vs. Hour Loop | Meituan ADR vs. Liquidity Services |
| Redbubble vs. Jd Com Inc | Redbubble vs. Bravada Intl | Redbubble vs. Allegroeu SA | Redbubble vs. PDD Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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