Correlation Between Hour Loop and PDD Holdings
Can any of the company-specific risk be diversified away by investing in both Hour Loop 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 Hour Loop and PDD Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hour Loop and PDD Holdings, you can compare the effects of market volatilities on Hour Loop 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 Hour Loop with a short position of PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hour Loop and PDD Holdings.
Diversification Opportunities for Hour Loop and PDD Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hour and PDD is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Hour Loop 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 Hour Loop 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 Hour Loop i.e., Hour Loop and PDD Holdings go up and down completely randomly.
Pair Corralation between Hour Loop and PDD Holdings
Given the investment horizon of 90 days Hour Loop is expected to generate 2.45 times more return on investment than PDD Holdings. However, Hour Loop is 2.45 times more volatile than PDD Holdings. It trades about 0.04 of its potential returns per unit of risk. PDD Holdings is currently generating about -0.32 per unit of risk. If you would invest 145.00 in Hour Loop on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Hour Loop or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hour Loop vs. PDD Holdings
Performance |
| Timeline |
| Hour Loop |
| PDD Holdings |
Hour Loop and PDD Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hour Loop and PDD Holdings
The main advantage of trading using opposite Hour Loop and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hour Loop 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.| Hour Loop vs. Qurate Retail Series | Hour Loop vs. iPower Inc | Hour Loop vs. MOGU Inc | Hour Loop vs. Qurate Retail |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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