Correlation Between Pinduoduo and Etsy
Can any of the company-specific risk be diversified away by investing in both Pinduoduo and Etsy 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 Etsy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinduoduo and Etsy Inc, you can compare the effects of market volatilities on Pinduoduo and Etsy 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 Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinduoduo and Etsy.
Diversification Opportunities for Pinduoduo and Etsy
Pay attention - limited upside
The 3 months correlation between Pinduoduo and Etsy is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pinduoduo and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc 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 Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Pinduoduo i.e., Pinduoduo and Etsy go up and down completely randomly.
Pair Corralation between Pinduoduo and Etsy
Assuming the 90 days trading horizon Pinduoduo is expected to under-perform the Etsy. In addition to that, Pinduoduo is 1.85 times more volatile than Etsy Inc. It trades about -0.03 of its total potential returns per unit of risk. Etsy Inc is currently generating about -0.01 per unit of volatility. If you would invest 2,126 in Etsy Inc on August 30, 2024 and sell it today you would lose (110.00) from holding Etsy Inc or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinduoduo vs. Etsy Inc
Performance |
| Timeline |
| Pinduoduo |
| Etsy Inc |
Pinduoduo and Etsy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinduoduo and Etsy
The main advantage of trading using opposite Pinduoduo and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinduoduo position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.| Pinduoduo vs. CVS Health | Pinduoduo vs. STMicroelectronics NV | Pinduoduo vs. Zoom Video Communications | Pinduoduo vs. Planet Fitness |
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 CEOs Directory module to screen CEOs from public companies around the world.
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