Correlation Between Jd and Meituan ADR

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

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

Diversification Opportunities for Jd and Meituan ADR

0.72

Correlation Coefficient

Jd  Meituan ADR

Poor diversification

The 3 months correlation between Jd and Meituan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jd Com Inc and Meituan ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan ADR and Jd 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 Jd Com Inc are associated (or correlated) with Meituan ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan ADR has no effect on the direction of Jd i.e., Jd and Meituan ADR go up and down completely randomly.

Pair Corralation between Jd and Meituan ADR

Assuming the 90 days horizon Jd Com Inc is expected to generate 1.34 times more return on investment than Meituan ADR. However, Jd is 1.34 times more volatile than Meituan ADR. It trades about 0.08 of its potential returns per unit of risk. Meituan ADR is currently generating about 0.06 per unit of risk. If you would invest  1,850  in Jd Com Inc on December 29, 2024 and sell it today you would earn a total of  309.00  from holding Jd Com Inc or generate 16.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Jd Com Inc  vs.  Meituan ADR

Jd Com Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jd Com Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, Jd reported solid returns over the last few months and may actually be approaching a breakup point.

Meituan ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Meituan ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Meituan ADR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jd and Meituan ADR

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

The idea behind Jd Com Inc and Meituan ADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.