I am holding some Japanese ADR and want to learn more how exactly it works. The thing confusing me most is the trading time. According to investopedia, the trading time of an ADR is the 9:30 am to 4 pm edt, which is the trading time of us stocks. I am wondering how the ADR price aligns with the original Japanese stocks since not every one is trading at the same time?
One assumption is Japanese trade when Americans sleep, and the underlying stock changes inflict on the opening price of ADR, when Americans trade while Japanese sleep. The ADR changes inflict on the opening price of the underlying stock price of the Japanese market. Is this assumption true?