Correlation Between PDD Holdings and Americas Car
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and Americas Car 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 Americas Car into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Americas Car Mart, you can compare the effects of market volatilities on PDD Holdings and Americas Car 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 Americas Car. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Americas Car.
Diversification Opportunities for PDD Holdings and Americas Car
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PDD and Americas is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Americas Car Mart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americas Car Mart 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 Americas Car. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americas Car Mart has no effect on the direction of PDD Holdings i.e., PDD Holdings and Americas Car go up and down completely randomly.
Pair Corralation between PDD Holdings and Americas Car
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the Americas Car. In addition to that, PDD Holdings is 1.16 times more volatile than Americas Car Mart. It trades about -0.32 of its total potential returns per unit of risk. Americas Car Mart is currently generating about 0.29 per unit of volatility. If you would invest 3,993 in Americas Car Mart on August 30, 2024 and sell it today you would earn a total of 728.00 from holding Americas Car Mart or generate 18.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. Americas Car Mart
Performance |
| Timeline |
| PDD Holdings |
| Americas Car Mart |
PDD Holdings and Americas Car Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Americas Car
The main advantage of trading using opposite PDD Holdings and Americas Car positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, Americas Car 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 Americas Car will offset losses from the drop in Americas Car's long position.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
| Americas Car vs. Sonic Automotive | Americas Car vs. Lithia Motors | Americas Car vs. AutoNation | Americas Car vs. Asbury Automotive Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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