Correlation Between Electric Last and Dada Nexus

Can any of the company-specific risk be diversified away by investing in both Electric Last 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 Electric Last and Dada Nexus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electric Last Mile and Dada Nexus, you can compare the effects of market volatilities on Electric Last 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 Electric Last with a short position of Dada Nexus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electric Last and Dada Nexus.

Diversification Opportunities for Electric Last and Dada Nexus

0.0

Correlation Coefficient

Electric Last  Dada Nexus

Pay attention - limited upside

The 3 months correlation between Electric and Dada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Electric Last Mile and Dada Nexus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dada Nexus and Electric Last 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 Electric Last Mile 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 Electric Last i.e., Electric Last and Dada Nexus go up and down completely randomly.

Pair Corralation between Electric Last and Dada Nexus

If you would invest  111.00  in Dada Nexus on September 3, 2024 and sell it today you would earn a total of  35.00  from holding Dada Nexus or generate 31.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Electric Last Mile  vs.  Dada Nexus

Electric Last Mile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electric Last Mile has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Electric Last is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Dada Nexus

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dada Nexus are ranked lower than 7 (%) 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.

Pair Trading with Electric Last and Dada Nexus

The main advantage of trading using opposite Electric Last and Dada Nexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electric Last 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 Electric Last Mile 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.