Correlation Between Jeffs Brands and PDD Holdings

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

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

Diversification Opportunities for Jeffs Brands and PDD Holdings

-0.58

Correlation Coefficient

Jeffs Brands  PDD Holdings

Excellent diversification

The 3 months correlation between Jeffs and PDD is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Jeffs Brands and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Jeffs Brands 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 Jeffs Brands 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 Jeffs Brands i.e., Jeffs Brands and PDD Holdings go up and down completely randomly.

Pair Corralation between Jeffs Brands and PDD Holdings

Assuming the 90 days horizon Jeffs Brands is expected to generate 18.2 times more return on investment than PDD Holdings. However, Jeffs Brands is 18.2 times more volatile than PDD Holdings. It trades about 0.08 of its potential returns per unit of risk. PDD Holdings is currently generating about -0.21 per unit of risk. If you would invest  5.00  in Jeffs Brands on October 10, 2024 and sell it today you would lose (1.51) from holding Jeffs Brands or give up 30.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Jeffs Brands  vs.  PDD Holdings

Jeffs Brands

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeffs Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Jeffs Brands showed solid returns over the last few months and may actually be approaching a breakup point.

PDD Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PDD Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Jeffs Brands and PDD Holdings

The main advantage of trading using opposite Jeffs Brands and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeffs Brands 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.

The idea behind Jeffs Brands and PDD Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.