Correlation Between PDD Holdings and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and The TJX Companies, you can compare the effects of market volatilities on PDD Holdings and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and T.J. Maxx.
Diversification Opportunities for PDD Holdings and T.J. Maxx
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PDD and T.J. is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of PDD Holdings i.e., PDD Holdings and T.J. Maxx go up and down completely randomly.
Pair Corralation between PDD Holdings and T.J. Maxx
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the T.J. Maxx. In addition to that, PDD Holdings is 3.72 times more volatile than The TJX Companies. It trades about -0.06 of its total potential returns per unit of risk. The TJX Companies is currently generating about 0.14 per unit of volatility. If you would invest 10,475 in The TJX Companies on August 30, 2024 and sell it today you would earn a total of 2,161 from holding The TJX Companies or generate 20.63% 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. The TJX Companies
Performance |
| Timeline |
| PDD Holdings |
| TJX Companies |
PDD Holdings and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and T.J. Maxx
The main advantage of trading using opposite PDD Holdings and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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