Correlation Between Caesars Entertainment, and Pinduoduo

Can any of the company-specific risk be diversified away by investing in both Caesars Entertainment, and Pinduoduo 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 Caesars Entertainment, and Pinduoduo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caesars Entertainment, and Pinduoduo, you can compare the effects of market volatilities on Caesars Entertainment, and Pinduoduo 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 Caesars Entertainment, with a short position of Pinduoduo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesars Entertainment, and Pinduoduo.

Diversification Opportunities for Caesars Entertainment, and Pinduoduo

0.64

Correlation Coefficient

Caesars Entertainment,  Pinduoduo

Poor diversification

The 3 months correlation between Caesars and Pinduoduo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment, and Pinduoduo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinduoduo and Caesars Entertainment, 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 Caesars Entertainment, are associated (or correlated) with Pinduoduo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinduoduo has no effect on the direction of Caesars Entertainment, i.e., Caesars Entertainment, and Pinduoduo go up and down completely randomly.

Pair Corralation between Caesars Entertainment, and Pinduoduo

Assuming the 90 days trading horizon Caesars Entertainment, is expected to generate 0.69 times more return on investment than Pinduoduo. However, Caesars Entertainment, is 1.45 times less risky than Pinduoduo. It trades about -0.14 of its potential returns per unit of risk. Pinduoduo is currently generating about -0.13 per unit of risk. If you would invest  2,444  in Caesars Entertainment, on October 11, 2024 and sell it today you would lose (450.00) from holding Caesars Entertainment, or give up 18.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Caesars Entertainment,  vs.  Pinduoduo

Caesars Entertainment,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caesars Entertainment, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pinduoduo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinduoduo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Caesars Entertainment, and Pinduoduo

The main advantage of trading using opposite Caesars Entertainment, and Pinduoduo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caesars Entertainment, position performs unexpectedly, Pinduoduo 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 Pinduoduo will offset losses from the drop in Pinduoduo's long position.

The idea behind Caesars Entertainment, and Pinduoduo pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.