Correlation Between Dada Nexus and Qurate Retail

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

By analyzing existing cross correlation between Dada Nexus and Qurate Retail Series, you can compare the effects of market volatilities on Dada Nexus and Qurate Retail 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 Dada Nexus with a short position of Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dada Nexus and Qurate Retail.

Diversification Opportunities for Dada Nexus and Qurate Retail

0.43

Correlation Coefficient

Dada Nexus  Qurate Retail

Very weak diversification

The 3 months correlation between Dada and Qurate is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dada Nexus and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series and Dada Nexus 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 Dada Nexus are associated (or correlated) with Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of Dada Nexus i.e., Dada Nexus and Qurate Retail go up and down completely randomly.

Pair Corralation between Dada Nexus and Qurate Retail

Given the investment horizon of 90 days Dada Nexus is expected to generate 1.52 times more return on investment than Qurate Retail. However, Dada Nexus is 1.52 times more volatile than Qurate Retail Series. It trades about 0.1 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.04 per unit of risk. If you would invest  106.00  in Dada Nexus on September 15, 2024 and sell it today you would earn a total of  37.00  from holding Dada Nexus or generate 34.91% return on investment over 90 days.

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

Dada Nexus  vs.  Qurate Retail Series

Dada Nexus

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dada Nexus are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Dada Nexus sustained solid returns over the last few months and may actually be approaching a breakup point.

Qurate Retail Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qurate Retail Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dada Nexus and Qurate Retail

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

The idea behind Dada Nexus and Qurate Retail Series 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.