Correlation Between PDD Holdings and JD
Can any of the company-specific risk be diversified away by investing in both PDD Holdings 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 PDD Holdings and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and JD Inc Adr, you can compare the effects of market volatilities on PDD Holdings 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 PDD Holdings with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and JD.
Diversification Opportunities for PDD Holdings and JD
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PDD and JD is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr 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 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 Adr has no effect on the direction of PDD Holdings i.e., PDD Holdings and JD go up and down completely randomly.
Pair Corralation between PDD Holdings and JD
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the JD. But the stock apears to be less risky and, when comparing its historical volatility, PDD Holdings is 1.08 times less risky than JD. The stock trades about -0.32 of its potential returns per unit of risk. The JD Inc Adr is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 4,164 in JD Inc Adr on August 27, 2024 and sell it today you would lose (696.00) from holding JD Inc Adr or give up 16.71% 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. JD Inc Adr
Performance |
| Timeline |
| PDD Holdings |
| JD Inc Adr |
PDD Holdings and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and JD
The main advantage of trading using opposite PDD Holdings and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings 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.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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