Correlation Between PDD Holdings and Ross Stores
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Ross Stores, you can compare the effects of market volatilities on PDD Holdings and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Ross Stores.
Diversification Opportunities for PDD Holdings and Ross Stores
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PDD and Ross is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of PDD Holdings i.e., PDD Holdings and Ross Stores go up and down completely randomly.
Pair Corralation between PDD Holdings and Ross Stores
Considering the 90-day investment horizon PDD Holdings is expected to generate 2.55 times more return on investment than Ross Stores. However, PDD Holdings is 2.55 times more volatile than Ross Stores. It trades about 0.03 of its potential returns per unit of risk. Ross Stores is currently generating about 0.04 per unit of risk. If you would invest 9,611 in PDD Holdings on August 30, 2024 and sell it today you would earn a total of 269.00 from holding PDD Holdings or generate 2.8% 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. Ross Stores
Performance |
| Timeline |
| PDD Holdings |
| Ross Stores |
PDD Holdings and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Ross Stores
The main advantage of trading using opposite PDD Holdings and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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