Correlation Between Applied Materials and Dada Nexus

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Can any of the company-specific risk be diversified away by investing in both Applied Materials and Dada Nexus 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 Applied Materials and Dada Nexus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Dada Nexus, you can compare the effects of market volatilities on Applied Materials and Dada Nexus 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 Applied Materials with a short position of Dada Nexus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Dada Nexus.

Diversification Opportunities for Applied Materials and Dada Nexus

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Applied and Dada Nexus is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Dada Nexus Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dada Nexus and Applied Materials 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 Applied Materials are associated (or correlated) with Dada Nexus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dada Nexus has no effect on the direction of Applied Materials i.e., Applied Materials and Dada Nexus go up and down completely randomly.

Pair Corralation between Applied Materials and Dada Nexus

Given the investment horizon of 90 days Applied Materials is expected to generate 0.45 times more return on investment than Dada Nexus. However, Applied Materials is 2.23 times less risky than Dada Nexus. It trades about 0.04 of its potential returns per unit of risk. Dada Nexus is currently generating about -0.02 per unit of risk. If you would invest  5,959  in Applied Materials on June 27, 2022 and sell it today you would earn a total of  2,470  from holding Applied Materials or generate 41.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Applied Materials  vs.  Dada Nexus Ltd

 Performance (%) 
       Timeline  
Applied Materials 
Applied Performance
0 of 100
Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Applied Price Channel

Dada Nexus 
Dada Nexus Performance
0 of 100
Over the last 90 days Dada Nexus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Dada Nexus Price Channel

Applied Materials and Dada Nexus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Materials and Dada Nexus

The main advantage of trading using opposite Applied Materials and Dada Nexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Dada Nexus 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 Dada Nexus will offset losses from the drop in Dada Nexus' long position.
Applied Materials vs. Sigma Lithium Corp
The idea behind Applied Materials and Dada Nexus 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.
Dada Nexus vs. BUSHVELD MINERALS LTD
Check out your portfolio center. 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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