Correlation Between Dada Nexus and EBay

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

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

Diversification Opportunities for Dada Nexus and EBay

0.44

Correlation Coefficient

Dada Nexus  EBay

Very weak diversification

The 3 months correlation between Dada and EBay is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dada Nexus and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Dada Nexus 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 Dada Nexus are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Dada Nexus i.e., Dada Nexus and EBay go up and down completely randomly.

Pair Corralation between Dada Nexus and EBay

Given the investment horizon of 90 days Dada Nexus is expected to under-perform the EBay. In addition to that, Dada Nexus is 2.94 times more volatile than eBay Inc. It trades about -0.07 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.01 per unit of volatility. If you would invest  5,108  in eBay Inc on January 26, 2024 and sell it today you would earn a total of  10.00  from holding eBay Inc or generate 0.2% return on investment over 90 days.

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

Dada Nexus  vs.  eBay Inc

Dada Nexus

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dada Nexus are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Dada Nexus may actually be approaching a critical reversion point that can send shares even higher in May 2024.

eBay Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, EBay showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dada Nexus and EBay

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

The idea behind Dada Nexus and eBay Inc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.