Correlation Between Pinduoduo and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Pinduoduo and Alibaba Group 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 Pinduoduo and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinduoduo and Alibaba Group Holding, you can compare the effects of market volatilities on Pinduoduo and Alibaba Group 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 Pinduoduo with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinduoduo and Alibaba Group.
Diversification Opportunities for Pinduoduo and Alibaba Group
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pinduoduo and Alibaba is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Pinduoduo and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Pinduoduo 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 Pinduoduo are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Pinduoduo i.e., Pinduoduo and Alibaba Group go up and down completely randomly.
Pair Corralation between Pinduoduo and Alibaba Group
Assuming the 90 days trading horizon Pinduoduo is expected to generate 1.43 times more return on investment than Alibaba Group. However, Pinduoduo is 1.43 times more volatile than Alibaba Group Holding. It trades about 0.03 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.02 per unit of risk. If you would invest 4,690 in Pinduoduo on August 26, 2024 and sell it today you would earn a total of 1,132 from holding Pinduoduo or generate 24.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Pinduoduo vs. Alibaba Group Holding
Performance |
| Timeline |
| Pinduoduo |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Alibaba Group Holding |
Pinduoduo and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinduoduo and Alibaba Group
The main advantage of trading using opposite Pinduoduo and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinduoduo position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Pinduoduo vs. Taiwan Semiconductor Manufacturing | Pinduoduo vs. Agilent Technologies | Pinduoduo vs. Cognizant Technology Solutions | Pinduoduo vs. salesforce inc |
| Alibaba Group vs. Southwest Airlines Co | Alibaba Group vs. Hospital Mater Dei | Alibaba Group vs. Extra Space Storage | Alibaba Group vs. Apartment Investment and |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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