Correlation Between PDD Holdings and WISH Old

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

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

Diversification Opportunities for PDD Holdings and WISH Old

-0.26

Correlation Coefficient

PDD Holdings  WISH Old

Very good diversification

The 3 months correlation between PDD and WISH is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and WISH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WISH Old 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 WISH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WISH Old has no effect on the direction of PDD Holdings i.e., PDD Holdings and WISH Old go up and down completely randomly.

Pair Corralation between PDD Holdings and WISH Old

If you would invest  9,775  in PDD Holdings on September 3, 2024 and sell it today you would lose (119.00) from holding PDD Holdings or give up 1.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

PDD Holdings  vs.  WISH Old

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.

WISH Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WISH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WISH Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with PDD Holdings and WISH Old

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

The idea behind PDD Holdings and WISH Old 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.