Correlation Between MOGU and PDD Holdings

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

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

Diversification Opportunities for MOGU and PDD Holdings

0.23

Correlation Coefficient

MOGU  PDD Holdings

Modest diversification

The 3 months correlation between MOGU and PDD is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MOGU Inc and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and MOGU 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 MOGU Inc 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 MOGU i.e., MOGU and PDD Holdings go up and down completely randomly.

Pair Corralation between MOGU and PDD Holdings

Given the investment horizon of 90 days MOGU Inc is expected to generate 1.74 times more return on investment than PDD Holdings. However, MOGU is 1.74 times more volatile than PDD Holdings. It trades about 0.03 of its potential returns per unit of risk. PDD Holdings is currently generating about 0.0 per unit of risk. If you would invest  218.00  in MOGU Inc on September 25, 2024 and sell it today you would earn a total of  0.00  from holding MOGU Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MOGU Inc  vs.  PDD Holdings

MOGU Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, MOGU may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with MOGU and PDD Holdings

The main advantage of trading using opposite MOGU and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOGU 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 MOGU Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..