Correlation Between Solo Brands and PDD Holdings
Can any of the company-specific risk be diversified away by investing in both Solo Brands 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 Solo Brands and PDD Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and PDD Holdings, you can compare the effects of market volatilities on Solo Brands 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 Solo Brands with a short position of PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and PDD Holdings.
Diversification Opportunities for Solo Brands and PDD Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solo and PDD is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Solo Brands 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 Solo Brands 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 Solo Brands i.e., Solo Brands and PDD Holdings go up and down completely randomly.
Pair Corralation between Solo Brands and PDD Holdings
Considering the 90-day investment horizon Solo Brands is expected to generate 1.92 times less return on investment than PDD Holdings. In addition to that, Solo Brands is 1.04 times more volatile than PDD Holdings. It trades about 0.05 of its total potential returns per unit of risk. PDD Holdings is currently generating about 0.11 per unit of volatility. 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 | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Solo Brands vs. PDD Holdings
Performance |
| Timeline |
| Solo Brands |
| PDD Holdings |
Solo Brands and PDD Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and PDD Holdings
The main advantage of trading using opposite Solo Brands and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands 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.| Solo Brands vs. Qurate Retail Series | Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun Inc |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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