What should I buy JD (NASDAQ:JD) or Dada Nexus (NASDAQ:DADA)?
 | By Ellen Johnson | Macroaxis Story |
It looks like JD will continue to recover much faster as its share price surged up 1.98% today to Dada Nexus's 30.4646%. As many rational traders are trying to avoid consumer cyclical space, it makes sense to go over Dada Nexus Limited a little further and understand how it stands against JD and other similar entities. We are going to analyze some of the competitive aspects of both Dada Nexus and JD.
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Reviewed by Michael Smolkin
By analyzing existing basic indicators between Dada Nexus and JD, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in JD with a short position in Dada Nexus. Check out our pair correlation module for more information.
Let's begin by analyzing the assets. The concept of asset utilization usually refers to the revenue earned for every dollar of assets a company currently reports. The current return on assets of Dada Nexus suggests not a very effective usage of assets in November. Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as Dada or Sea is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.
Let's begin by analyzing the assets. The concept of asset utilization usually refers to the revenue earned for every dollar of assets a company currently reports. The current return on assets of Dada Nexus suggests not a very effective usage of assets in November. Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as Dada or Sea is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.
How important is Dada Nexus's Liquidity
Dada Nexus financial leverage refers to using borrowed capital as a funding source to finance Dada Nexus ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Dada Nexus financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Dada Nexus' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Dada Nexus' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Dada Nexus's total debt and its cash.
Correlation Between Dada and Sea
In general, Stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Dada Nexus together with similar or unrelated positions with a negative correlation. For example, you can also add Sea to your portfolio. If Sea is not perfectly correlated to Dada Nexus it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Dada Nexus, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down.
Are you currently holding both Dada Nexus and Sea in your portfolio? Please note if you are using this as a pair-trade strategy between Dada Nexus and Sea, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses. Please check pair correlation details between DADA and SE for more information.Building efficient market-beating portfolios requires time, education, and a lot of computing power!
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This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Dada Nexus. Please refer to our Terms of Use for any information regarding our disclosure principles.