Correlation Between Pinduoduo and JD
Can any of the company-specific risk be diversified away by investing in both Pinduoduo and JD 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 JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinduoduo and JD Inc, you can compare the effects of market volatilities on Pinduoduo and JD 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 JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinduoduo and JD.
Diversification Opportunities for Pinduoduo and JD
Poor diversification
The 3 months correlation between Pinduoduo and JD is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pinduoduo and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD 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 JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of Pinduoduo i.e., Pinduoduo and JD go up and down completely randomly.
Pair Corralation between Pinduoduo and JD
Assuming the 90 days trading horizon Pinduoduo is expected to under-perform the JD. In addition to that, Pinduoduo is 1.01 times more volatile than JD Inc. It trades about -0.24 of its total potential returns per unit of risk. JD Inc is currently generating about -0.13 per unit of volatility. If you would invest 3,828 in JD Inc on August 23, 2024 and sell it today you would lose (414.00) from holding JD Inc or give up 10.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinduoduo vs. JD Inc
Performance |
| Timeline |
| Pinduoduo |
| JD Inc |
Pinduoduo and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinduoduo and JD
The main advantage of trading using opposite Pinduoduo and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinduoduo position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.| Pinduoduo vs. British American Tobacco | Pinduoduo vs. Marvell Technology | Pinduoduo vs. Take Two Interactive Software | Pinduoduo vs. Bemobi Mobile Tech |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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