Correlation Between PDD Holdings and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both PDD Holdings 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 PDD Holdings and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Alibaba Group Holding, you can compare the effects of market volatilities on PDD Holdings 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 PDD Holdings with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Alibaba Group.
Diversification Opportunities for PDD Holdings and Alibaba Group
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PDD and Alibaba is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings 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 PDD Holdings 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 PDD Holdings 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 PDD Holdings i.e., PDD Holdings and Alibaba Group go up and down completely randomly.
Pair Corralation between PDD Holdings and Alibaba Group
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the Alibaba Group. But the stock apears to be less risky and, when comparing its historical volatility, PDD Holdings is 1.14 times less risky than Alibaba Group. The stock trades about -0.32 of its potential returns per unit of risk. The Alibaba Group Holding is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,201 in Alibaba Group Holding on September 1, 2024 and sell it today you would lose (121.00) from holding Alibaba Group Holding or give up 10.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. Alibaba Group Holding
Performance |
| Timeline |
| PDD Holdings |
| Alibaba Group Holding |
PDD Holdings and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Alibaba Group
The main advantage of trading using opposite PDD Holdings and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings 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.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
| Alibaba Group vs. Meituan ADR | Alibaba Group vs. Meituan | Alibaba Group vs. Qurate Retail Series | Alibaba Group vs. ThredUp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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