Correlation Between Revolve Group and PDD Holdings
Can any of the company-specific risk be diversified away by investing in both Revolve Group and PDD Holdings 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 Revolve Group and PDD Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Revolve Group LLC and PDD Holdings, you can compare the effects of market volatilities on Revolve Group and PDD Holdings 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 Revolve Group with a short position of PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolve Group and PDD Holdings.
Diversification Opportunities for Revolve Group and PDD Holdings
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Revolve and PDD is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Revolve Group LLC and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Revolve Group 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 Revolve Group LLC are associated (or correlated) with PDD Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDD Holdings has no effect on the direction of Revolve Group i.e., Revolve Group and PDD Holdings go up and down completely randomly.
Pair Corralation between Revolve Group and PDD Holdings
Given the investment horizon of 90 days Revolve Group LLC is expected to generate 1.57 times more return on investment than PDD Holdings. However, Revolve Group is 1.57 times more volatile than PDD Holdings. It trades about -0.07 of its potential returns per unit of risk. PDD Holdings is currently generating about -0.38 per unit of risk. If you would invest 2,231 in Revolve Group LLC on January 13, 2025 and sell it today you would lose (236.00) from holding Revolve Group LLC or give up 10.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Revolve Group LLC vs. PDD Holdings
Performance |
| Timeline |
| Revolve Group LLC |
| PDD Holdings |
Revolve Group and PDD Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Revolve Group and PDD Holdings
The main advantage of trading using opposite Revolve Group and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolve Group position performs unexpectedly, PDD Holdings 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 PDD Holdings will offset losses from the drop in PDD Holdings' long position.| Revolve Group vs. Sea | Revolve Group vs. MercadoLibre | Revolve Group vs. Jumia Technologies AG | Revolve Group vs. PDD Holdings |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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