Correlation Between Etsy and Pinduoduo
Can any of the company-specific risk be diversified away by investing in both Etsy and Pinduoduo 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 Etsy and Pinduoduo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etsy Inc and Pinduoduo, you can compare the effects of market volatilities on Etsy and Pinduoduo 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 Etsy with a short position of Pinduoduo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and Pinduoduo.
Diversification Opportunities for Etsy and Pinduoduo
Excellent diversification
The 3 months correlation between Etsy and Pinduoduo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Pinduoduo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinduoduo and Etsy 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 Etsy Inc are associated (or correlated) with Pinduoduo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinduoduo has no effect on the direction of Etsy i.e., Etsy and Pinduoduo go up and down completely randomly.
Pair Corralation between Etsy and Pinduoduo
Assuming the 90 days trading horizon Etsy Inc is expected to under-perform the Pinduoduo. But the stock apears to be less risky and, when comparing its historical volatility, Etsy Inc is 1.8 times less risky than Pinduoduo. The stock trades about -0.03 of its potential returns per unit of risk. The Pinduoduo is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,231 in Pinduoduo on August 26, 2024 and sell it today you would lose (1,409) from holding Pinduoduo or give up 19.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Etsy Inc vs. Pinduoduo
Performance |
| Timeline |
| Etsy Inc |
| Pinduoduo |
Etsy and Pinduoduo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etsy and Pinduoduo
The main advantage of trading using opposite Etsy and Pinduoduo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etsy position performs unexpectedly, Pinduoduo 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 Pinduoduo will offset losses from the drop in Pinduoduo's long position.| Etsy vs. Fidelity National Information | Etsy vs. Automatic Data Processing | Etsy vs. Bio Techne | Etsy vs. Dell Technologies |
| Pinduoduo vs. Taiwan Semiconductor Manufacturing | Pinduoduo vs. Agilent Technologies | Pinduoduo vs. Cognizant Technology Solutions | Pinduoduo vs. salesforce inc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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