Correlation Between Honest and Dada Nexus

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

Diversification Opportunities for Honest and Dada Nexus

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Honest and Dada Nexus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Honest and Dada Nexus Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dada Nexus and Honest 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 The Honest 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 Honest i.e., Honest and Dada Nexus go up and down completely randomly.

Pair Corralation between Honest and Dada Nexus

Given the investment horizon of 90 days The Honest is expected to under-perform the Dada Nexus. But the stock apears to be less risky and, when comparing its historical volatility, The Honest is 1.19 times less risky than Dada Nexus. The stock trades about -0.06 of its potential returns per unit of risk. The Dada Nexus is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,991  in Dada Nexus on August 30, 2022 and sell it today you would lose (3,526)  from holding Dada Nexus or give up 88.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy79.88%
ValuesDaily Returns

The Honest  vs.  Dada Nexus Ltd

 Performance (%) 
       Timeline  
Honest 
Honest Performance
0 of 100
Over the last 90 days The Honest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Honest 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 conflicting performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Dada Nexus Price Channel

Honest and Dada Nexus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Honest and Dada Nexus

The main advantage of trading using opposite Honest and Dada Nexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest 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.
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The idea behind The Honest 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.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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