Correlation Between PDD Holdings and Dillards

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

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

Diversification Opportunities for PDD Holdings and Dillards

-0.76

Correlation Coefficient

PDD Holdings  Dillards

Pay attention - limited upside

The 3 months correlation between PDD and Dillards is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of PDD Holdings i.e., PDD Holdings and Dillards go up and down completely randomly.

Pair Corralation between PDD Holdings and Dillards

Considering the 90-day investment horizon PDD Holdings is expected to under-perform the Dillards. In addition to that, PDD Holdings is 1.55 times more volatile than Dillards. It trades about -0.04 of its total potential returns per unit of risk. Dillards is currently generating about 0.03 per unit of volatility. If you would invest  40,925  in Dillards on September 23, 2024 and sell it today you would earn a total of  2,509  from holding Dillards or generate 6.13% return on investment over 90 days.

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

PDD Holdings  vs.  Dillards

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.

Dillards

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Dillards unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PDD Holdings and Dillards

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

The idea behind PDD Holdings and Dillards 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.