Correlation Between Pinduoduo and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Pinduoduo and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinduoduo and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Pinduoduo and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinduoduo and Sumitomo Mitsui.
Diversification Opportunities for Pinduoduo and Sumitomo Mitsui
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pinduoduo and Sumitomo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pinduoduo and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Pinduoduo i.e., Pinduoduo and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Pinduoduo and Sumitomo Mitsui
Assuming the 90 days trading horizon Pinduoduo is expected to under-perform the Sumitomo Mitsui. In addition to that, Pinduoduo is 2.22 times more volatile than Sumitomo Mitsui Financial. It trades about -0.15 of its total potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.38 per unit of volatility. If you would invest 7,378 in Sumitomo Mitsui Financial on August 31, 2024 and sell it today you would earn a total of 1,034 from holding Sumitomo Mitsui Financial or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinduoduo vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Pinduoduo |
| Sumitomo Mitsui Financial |
Pinduoduo and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinduoduo and Sumitomo Mitsui
The main advantage of trading using opposite Pinduoduo and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinduoduo position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Pinduoduo vs. Sumitomo Mitsui Financial | Pinduoduo vs. Bread Financial Holdings | Pinduoduo vs. HDFC Bank Limited | Pinduoduo vs. Marfrig Global Foods |
| Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Western Digital | Sumitomo Mitsui vs. Energisa SA |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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