Volkswagen

ADR shares – American Depository Receipt

American Depository Receipt (English. American Depositary Receipt), ADR (English. ADR) - a derivative security freely traded on the American stock market for the shares of a foreign company, deposited with an American depositary bank. 95 % of ADR issues accounted for by three banks - Bank of New York, Citibank, J. P. Morgan Chase. ADRs are denominated in US dollars and are traded both on American stock exchanges, and in American OTC trading systems. American Depository Receipts ADRs (English. ADR) - usually issued by American banks for foreign shares, which were acquired by this bank. Owner of ADR, like a real shareholder, receives dividends on them, and can benefit from an increase in market value. Since ADRs are issued in US dollars, their price is also influenced by the exchange rate.

Pair trading: why won't I tell my students about it

A few years ago, a German billionaire started pair trading with two classes of Volkswagen stock.. Ended up, that he threw himself under the train. The strategy of pair trading – buying one stock against selling another within one sector – looks attractive in theory., but can be a real killer of your portfolio. This is how it works: when you trade a stock in a pair, you buy the laggard and sell the overtaker. You bet on reverting to mean. In other words, you think, what share, which performs relatively poorly, over the next period will straighten and overtake that, what worked well. In the oil sector, this could be, for example, Exxon Mobil (XOM) against Royal Dutch (RDS), in the healthcare sector something like GlaxoSmithKline (GSK) against Pfizer (PFE). This is a popular strategy, and opportunities can be easily spotted on the chart, where the ratio of one stock to another is displayed, ie. on a relative chart. Here you see a graph of the consumer goods company Unilever. (AND) against his competitor Procter & Gamble (PG). This is a three-year chart, and when the line goes up, this means, that UN is ahead of PG, а когда вниз – PG обгоняет UN.

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