Correlation Between PDD Holdings and Qurate Retail

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

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

Diversification Opportunities for PDD Holdings and Qurate Retail

0.41

Correlation Coefficient

PDD Holdings  Qurate Retail

Very weak diversification

The 3 months correlation between PDD and Qurate is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series 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 Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of PDD Holdings i.e., PDD Holdings and Qurate Retail go up and down completely randomly.

Pair Corralation between PDD Holdings and Qurate Retail

Considering the 90-day investment horizon PDD Holdings is expected to generate 0.79 times more return on investment than Qurate Retail. However, PDD Holdings is 1.26 times less risky than Qurate Retail. It trades about 0.02 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.07 per unit of risk. If you would invest  9,775  in PDD Holdings on August 31, 2024 and sell it today you would earn a total of  105.00  from holding PDD Holdings or generate 1.07% return on investment over 90 days.

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

PDD Holdings  vs.  Qurate Retail Series

PDD Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PDD Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Qurate Retail Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qurate Retail Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PDD Holdings and Qurate Retail

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

The idea behind PDD Holdings and Qurate Retail Series 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.