Correlation Between Pinduoduo and Commerzbank
Can any of the company-specific risk be diversified away by investing in both Pinduoduo and Commerzbank 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 Pinduoduo and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinduoduo and Commerzbank AG, you can compare the effects of market volatilities on Pinduoduo and Commerzbank 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 Pinduoduo with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinduoduo and Commerzbank.
Diversification Opportunities for Pinduoduo and Commerzbank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pinduoduo and Commerzbank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pinduoduo and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and Pinduoduo 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 Pinduoduo are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Pinduoduo i.e., Pinduoduo and Commerzbank go up and down completely randomly.
Pair Corralation between Pinduoduo and Commerzbank
Assuming the 90 days trading horizon Pinduoduo is expected to generate 1.25 times less return on investment than Commerzbank. In addition to that, Pinduoduo is 1.81 times more volatile than Commerzbank AG. It trades about 0.03 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.07 per unit of volatility. If you would invest 746.00 in Commerzbank AG on August 26, 2024 and sell it today you would earn a total of 789.00 from holding Commerzbank AG or generate 105.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinduoduo vs. Commerzbank AG
Performance |
| Timeline |
| Pinduoduo |
| Commerzbank AG |
Pinduoduo and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinduoduo and Commerzbank
The main advantage of trading using opposite Pinduoduo and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinduoduo position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| Pinduoduo vs. Amazon Inc | Pinduoduo vs. Amazon Inc | Pinduoduo vs. Alibaba Group Holdings | Pinduoduo vs. Meituan |
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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 the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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