Correlation Between Birks and PDD Holdings
Can any of the company-specific risk be diversified away by investing in both Birks 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 Birks and PDD Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and PDD Holdings, you can compare the effects of market volatilities on Birks 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 Birks with a short position of PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and PDD Holdings.
Diversification Opportunities for Birks and PDD Holdings
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Birks and PDD is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Birks 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 Birks Group 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 Birks i.e., Birks and PDD Holdings go up and down completely randomly.
Pair Corralation between Birks and PDD Holdings
Considering the 90-day investment horizon Birks Group is expected to under-perform the PDD Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Birks Group is 1.21 times less risky than PDD Holdings. The stock trades about -0.23 of its potential returns per unit of risk. The PDD Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,100 in PDD Holdings on October 20, 2024 and sell it today you would earn a total of 457.00 from holding PDD Holdings or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birks Group vs. PDD Holdings
Performance |
| Timeline |
| Birks Group |
| PDD Holdings |
Birks and PDD Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and PDD Holdings
The main advantage of trading using opposite Birks and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks 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.The idea behind Birks Group and PDD Holdings 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.| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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