Correlation Between DoorDash and TuanChe ADR

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

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

Diversification Opportunities for DoorDash and TuanChe ADR

-0.61

Correlation Coefficient

DoorDash  TuanChe ADR

Excellent diversification

The 3 months correlation between DoorDash and TuanChe is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding DoorDash Class A and TuanChe ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TuanChe ADR and DoorDash 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 DoorDash Class A are associated (or correlated) with TuanChe ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TuanChe ADR has no effect on the direction of DoorDash i.e., DoorDash and TuanChe ADR go up and down completely randomly.

Pair Corralation between DoorDash and TuanChe ADR

Given the investment horizon of 90 days DoorDash Class A is expected to under-perform the TuanChe ADR. But the stock apears to be less risky and, when comparing its historical volatility, DoorDash Class A is 4.84 times less risky than TuanChe ADR. The stock trades about -0.25 of its potential returns per unit of risk. The TuanChe ADR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  159.00  in TuanChe ADR on January 26, 2024 and sell it today you would earn a total of  12.00  from holding TuanChe ADR or generate 7.55% return on investment over 90 days.

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

DoorDash Class A  vs.  TuanChe ADR

DoorDash Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DoorDash Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, DoorDash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TuanChe ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TuanChe ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with DoorDash and TuanChe ADR

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

The idea behind DoorDash Class A and TuanChe 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.