Correlation Between PDD Holdings and Stoneridge
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and Stoneridge 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 Stoneridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Stoneridge, you can compare the effects of market volatilities on PDD Holdings and Stoneridge 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 Stoneridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Stoneridge.
Diversification Opportunities for PDD Holdings and Stoneridge
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PDD and Stoneridge is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Stoneridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoneridge 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 Stoneridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoneridge has no effect on the direction of PDD Holdings i.e., PDD Holdings and Stoneridge go up and down completely randomly.
Pair Corralation between PDD Holdings and Stoneridge
Considering the 90-day investment horizon PDD Holdings is expected to generate 1.2 times more return on investment than Stoneridge. However, PDD Holdings is 1.2 times more volatile than Stoneridge. It trades about 0.02 of its potential returns per unit of risk. Stoneridge is currently generating about -0.07 per unit of risk. If you would invest 8,971 in PDD Holdings on August 30, 2024 and sell it today you would earn a total of 909.00 from holding PDD Holdings or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. Stoneridge
Performance |
| Timeline |
| PDD Holdings |
| Stoneridge |
PDD Holdings and Stoneridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Stoneridge
The main advantage of trading using opposite PDD Holdings and Stoneridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, Stoneridge 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 Stoneridge will offset losses from the drop in Stoneridge's long position.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
| Stoneridge vs. Monro Muffler Brake | Stoneridge vs. Motorcar Parts of | Stoneridge vs. Standard Motor Products | Stoneridge vs. Douglas Dynamics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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