Correlation Between PDD Holdings and Yunji

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

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

Diversification Opportunities for PDD Holdings and Yunji

0.63

Correlation Coefficient

PDD Holdings  Yunji

Poor diversification

The 3 months correlation between PDD and Yunji is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Yunji Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunji Inc 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 Yunji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunji Inc has no effect on the direction of PDD Holdings i.e., PDD Holdings and Yunji go up and down completely randomly.

Pair Corralation between PDD Holdings and Yunji

Considering the 90-day investment horizon PDD Holdings is expected to generate 0.71 times more return on investment than Yunji. However, PDD Holdings is 1.41 times less risky than Yunji. It trades about 0.14 of its potential returns per unit of risk. Yunji Inc is currently generating about 0.06 per unit of risk. If you would invest  9,887  in PDD Holdings on December 25, 2024 and sell it today you would earn a total of  2,636  from holding PDD Holdings or generate 26.66% return on investment over 90 days.

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

PDD Holdings  vs.  Yunji Inc

PDD Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PDD Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, PDD Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Yunji Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yunji Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Yunji revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PDD Holdings and Yunji

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

The idea behind PDD Holdings and Yunji Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.