Correlation Between AutoNation and PDD Holdings
Can any of the company-specific risk be diversified away by investing in both AutoNation and PDD Holdings 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 AutoNation and PDD Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and PDD Holdings, you can compare the effects of market volatilities on AutoNation and PDD Holdings 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 AutoNation with a short position of PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and PDD Holdings.
Diversification Opportunities for AutoNation and PDD Holdings
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AutoNation and PDD is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and AutoNation 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 AutoNation are associated (or correlated) with PDD Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDD Holdings has no effect on the direction of AutoNation i.e., AutoNation and PDD Holdings go up and down completely randomly.
Pair Corralation between AutoNation and PDD Holdings
Allowing for the 90-day total investment horizon AutoNation is expected to generate 2.18 times less return on investment than PDD Holdings. But when comparing it to its historical volatility, AutoNation is 2.02 times less risky than PDD Holdings. It trades about 0.06 of its potential returns per unit of risk. PDD Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,775 in PDD Holdings on November 2, 2024 and sell it today you would earn a total of 1,765 from holding PDD Holdings or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoNation vs. PDD Holdings
Performance |
| Timeline |
| AutoNation |
| PDD Holdings |
AutoNation and PDD Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and PDD Holdings
The main advantage of trading using opposite AutoNation and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, PDD Holdings 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 PDD Holdings will offset losses from the drop in PDD Holdings' long position.| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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