Correlation Between Dingdong ADR and Krispy Kreme

Can any of the company-specific risk be diversified away by investing in both Dingdong ADR and Krispy Kreme 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 Dingdong ADR and Krispy Kreme into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dingdong ADR and Krispy Kreme, you can compare the effects of market volatilities on Dingdong ADR and Krispy Kreme 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 Dingdong ADR with a short position of Krispy Kreme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dingdong ADR and Krispy Kreme.

Diversification Opportunities for Dingdong ADR and Krispy Kreme

0.67

Correlation Coefficient

Dingdong ADR  Krispy Kreme

Poor diversification

The 3 months correlation between Dingdong and Krispy is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dingdong ADR and Krispy Kreme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krispy Kreme and Dingdong 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 Dingdong ADR are associated (or correlated) with Krispy Kreme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krispy Kreme has no effect on the direction of Dingdong ADR i.e., Dingdong ADR and Krispy Kreme go up and down completely randomly.

Pair Corralation between Dingdong ADR and Krispy Kreme

Considering the 90-day investment horizon Dingdong ADR is expected to generate 0.94 times more return on investment than Krispy Kreme. However, Dingdong ADR is 1.07 times less risky than Krispy Kreme. It trades about -0.08 of its potential returns per unit of risk. Krispy Kreme is currently generating about -0.18 per unit of risk. If you would invest  359.00  in Dingdong ADR on December 29, 2024 and sell it today you would lose (78.00) from holding Dingdong ADR or give up 21.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dingdong ADR  vs.  Krispy Kreme

Dingdong ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dingdong ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Krispy Kreme

Risk-Adjusted Performance

Very Weak

Over the last 90 days Krispy Kreme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dingdong ADR and Krispy Kreme

The main advantage of trading using opposite Dingdong ADR and Krispy Kreme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dingdong ADR position performs unexpectedly, Krispy Kreme 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 Krispy Kreme will offset losses from the drop in Krispy Kreme's long position.

The idea behind Dingdong ADR and Krispy Kreme 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.