Correlation Between PDD Holdings and LKQ
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and LKQ 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 LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and LKQ Corporation, you can compare the effects of market volatilities on PDD Holdings and LKQ 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 LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and LKQ.
Diversification Opportunities for PDD Holdings and LKQ
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PDD and LKQ is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation 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 LKQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LKQ Corporation has no effect on the direction of PDD Holdings i.e., PDD Holdings and LKQ go up and down completely randomly.
Pair Corralation between PDD Holdings and LKQ
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the LKQ. In addition to that, PDD Holdings is 2.33 times more volatile than LKQ Corporation. It trades about -0.3 of its total potential returns per unit of risk. LKQ Corporation is currently generating about 0.2 per unit of volatility. If you would invest 3,727 in LKQ Corporation on September 4, 2024 and sell it today you would earn a total of 215.00 from holding LKQ Corporation or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. LKQ Corp.
Performance |
| Timeline |
| PDD Holdings |
| LKQ Corporation |
PDD Holdings and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and LKQ
The main advantage of trading using opposite PDD Holdings and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, LKQ 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 LKQ will offset losses from the drop in LKQ'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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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