Correlation Between 1StdibsCom and Meituan ADR

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom 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 1StdibsCom and Meituan ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1StdibsCom and Meituan ADR, you can compare the effects of market volatilities on 1StdibsCom 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 1StdibsCom with a short position of Meituan ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and Meituan ADR.

Diversification Opportunities for 1StdibsCom and Meituan ADR

-0.09

Correlation Coefficient

1StdibsCom  Meituan ADR

Good diversification

The 3 months correlation between 1StdibsCom and Meituan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Meituan ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan ADR and 1StdibsCom 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 1StdibsCom 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 1StdibsCom i.e., 1StdibsCom and Meituan ADR go up and down completely randomly.

Pair Corralation between 1StdibsCom and Meituan ADR

Given the investment horizon of 90 days 1StdibsCom is expected to generate 0.93 times more return on investment than Meituan ADR. However, 1StdibsCom is 1.07 times less risky than Meituan ADR. It trades about 0.01 of its potential returns per unit of risk. Meituan ADR is currently generating about -0.01 per unit of risk. If you would invest  590.00  in 1StdibsCom on March 13, 2024 and sell it today you would lose (40.00) from holding 1StdibsCom or give up 6.78% of portfolio value over 90 days.

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

1StdibsCom  vs.  Meituan ADR

1StdibsCom

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days 1StdibsCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Meituan ADR

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meituan ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Meituan ADR showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1StdibsCom and Meituan ADR

The main advantage of trading using opposite 1StdibsCom and Meituan ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom 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 1StdibsCom 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.