Correlation Between PDD Holdings and Invesco China
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and Invesco China 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 Invesco China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Invesco China Technology, you can compare the effects of market volatilities on PDD Holdings and Invesco China 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 Invesco China. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Invesco China.
Diversification Opportunities for PDD Holdings and Invesco China
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PDD and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Invesco China Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco China Technology 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 Invesco China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco China Technology has no effect on the direction of PDD Holdings i.e., PDD Holdings and Invesco China go up and down completely randomly.
Pair Corralation between PDD Holdings and Invesco China
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the Invesco China. In addition to that, PDD Holdings is 1.23 times more volatile than Invesco China Technology. It trades about -0.25 of its total potential returns per unit of risk. Invesco China Technology is currently generating about -0.04 per unit of volatility. If you would invest 4,043 in Invesco China Technology on August 25, 2024 and sell it today you would lose (121.00) from holding Invesco China Technology or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. Invesco China Technology
Performance |
| Timeline |
| PDD Holdings |
| Invesco China Technology |
PDD Holdings and Invesco China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Invesco China
The main advantage of trading using opposite PDD Holdings and Invesco China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, Invesco China 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 Invesco China will offset losses from the drop in Invesco China's long position.| PDD Holdings vs. Sea | PDD Holdings vs. Wayfair | PDD Holdings vs. Chewy Inc | PDD Holdings vs. Vipshop Holdings Limited |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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