Correlation Between PDD Holdings and Ollies Bargain

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

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

Diversification Opportunities for PDD Holdings and Ollies Bargain

-0.61

Correlation Coefficient

PDD Holdings  Ollies Bargain

Excellent diversification

The 3 months correlation between PDD and Ollies is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Ollies Bargain Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ollies Bargain Outlet 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 Ollies Bargain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ollies Bargain Outlet has no effect on the direction of PDD Holdings i.e., PDD Holdings and Ollies Bargain go up and down completely randomly.

Pair Corralation between PDD Holdings and Ollies Bargain

Considering the 90-day investment horizon PDD Holdings is expected to generate 0.87 times more return on investment than Ollies Bargain. However, PDD Holdings is 1.15 times less risky than Ollies Bargain. It trades about -0.11 of its potential returns per unit of risk. Ollies Bargain Outlet is currently generating about -0.14 per unit of risk. If you would invest  10,449  in PDD Holdings on October 11, 2024 and sell it today you would lose (417.00) from holding PDD Holdings or give up 3.99% of portfolio value over 90 days.

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

PDD Holdings  vs.  Ollies Bargain Outlet

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.

Ollies Bargain Outlet

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ollies Bargain Outlet are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Ollies Bargain may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PDD Holdings and Ollies Bargain

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

The idea behind PDD Holdings and Ollies Bargain Outlet 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.