Correlation Between Natural Grocers and Dada Nexus

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Can any of the company-specific risk be diversified away by investing in both Natural Grocers 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 Natural Grocers and Dada Nexus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Grocers by and Dada Nexus, you can compare the effects of market volatilities on Natural Grocers 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 Natural Grocers with a short position of Dada Nexus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Grocers and Dada Nexus.

Diversification Opportunities for Natural Grocers and Dada Nexus

NaturalDadaDiversified AwayNaturalDadaDiversified Away100%
0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Natural and Dada is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Dada Nexus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dada Nexus and Natural Grocers 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 Natural Grocers by 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 Natural Grocers i.e., Natural Grocers and Dada Nexus go up and down completely randomly.

Pair Corralation between Natural Grocers and Dada Nexus

Given the investment horizon of 90 days Natural Grocers by is expected to generate 0.55 times more return on investment than Dada Nexus. However, Natural Grocers by is 1.81 times less risky than Dada Nexus. It trades about 0.11 of its potential returns per unit of risk. Dada Nexus is currently generating about -0.02 per unit of risk. If you would invest  1,001  in Natural Grocers by on November 27, 2024 and sell it today you would earn a total of  3,148  from holding Natural Grocers by or generate 314.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Natural Grocers by  vs.  Dada Nexus

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020304050
JavaScript chart by amCharts 3.21.15NGVC DADA
       Timeline  
Natural Grocers by 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Natural Grocers by has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb38404244464850
Dada Nexus 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Dada Nexus are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Dada Nexus sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.21.31.41.51.61.71.81.9

Natural Grocers and Dada Nexus Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.06-9.78-6.5-3.220.05473.346.810.2513.7117.16 0.0140.0160.0180.0200.022
JavaScript chart by amCharts 3.21.15NGVC DADA
       Returns  

Pair Trading with Natural Grocers and Dada Nexus

The main advantage of trading using opposite Natural Grocers and Dada Nexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Grocers 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.
The idea behind Natural Grocers by and Dada Nexus pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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