Correlation Between PDD Holdings and Newegg Commerce
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and Newegg Commerce 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 Newegg Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Newegg Commerce, you can compare the effects of market volatilities on PDD Holdings and Newegg Commerce 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 Newegg Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Newegg Commerce.
Diversification Opportunities for PDD Holdings and Newegg Commerce
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PDD and Newegg is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Newegg Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newegg Commerce 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 Newegg Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newegg Commerce has no effect on the direction of PDD Holdings i.e., PDD Holdings and Newegg Commerce go up and down completely randomly.
Pair Corralation between PDD Holdings and Newegg Commerce
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the Newegg Commerce. But the stock apears to be less risky and, when comparing its historical volatility, PDD Holdings is 1.29 times less risky than Newegg Commerce. The stock trades about -0.26 of its potential returns per unit of risk. The Newegg Commerce is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Newegg Commerce on August 24, 2024 and sell it today you would lose (3.00) from holding Newegg Commerce or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. Newegg Commerce
Performance |
| Timeline |
| PDD Holdings |
| Newegg Commerce |
PDD Holdings and Newegg Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Newegg Commerce
The main advantage of trading using opposite PDD Holdings and Newegg Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, Newegg Commerce 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 Newegg Commerce will offset losses from the drop in Newegg Commerce's long position.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
| Newegg Commerce vs. Sea | Newegg Commerce vs. MercadoLibre | Newegg Commerce vs. Chewy Inc | Newegg Commerce vs. PDD Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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