Correlation Between PDD Holdings and Boqii Holding

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

By analyzing existing cross correlation between PDD Holdings and Boqii Holding Limited, you can compare the effects of market volatilities on PDD Holdings and Boqii Holding 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 Boqii Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Boqii Holding.

Diversification Opportunities for PDD Holdings and Boqii Holding

0.6

Correlation Coefficient

PDD Holdings  Boqii Holding

Poor diversification

The 3 months correlation between PDD and Boqii is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Boqii Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boqii Holding Limited 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 Boqii Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boqii Holding Limited has no effect on the direction of PDD Holdings i.e., PDD Holdings and Boqii Holding go up and down completely randomly.

Pair Corralation between PDD Holdings and Boqii Holding

Considering the 90-day investment horizon PDD Holdings is expected to generate 0.71 times more return on investment than Boqii Holding. However, PDD Holdings is 1.4 times less risky than Boqii Holding. It trades about 0.0 of its potential returns per unit of risk. Boqii Holding Limited is currently generating about -0.59 per unit of risk. If you would invest  10,007  in PDD Holdings on September 23, 2024 and sell it today you would lose (56.00) from holding PDD Holdings or give up 0.56% of portfolio value over 90 days.

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

PDD Holdings  vs.  Boqii Holding Limited

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 rather sound fundamental indicators, PDD Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Boqii Holding Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boqii Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Boqii Holding is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PDD Holdings and Boqii Holding

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

The idea behind PDD Holdings and Boqii Holding Limited 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.