Correlation Between Secoo Holding and PDD Holdings

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

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

Diversification Opportunities for Secoo Holding and PDD Holdings

-0.17

Correlation Coefficient

Secoo Holding  PDD Holdings

Good diversification

The 3 months correlation between Secoo and PDD is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Secoo Holding and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Secoo Holding 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 Secoo Holding are associated (or correlated) with PDD Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDD Holdings has no effect on the direction of Secoo Holding i.e., Secoo Holding and PDD Holdings go up and down completely randomly.

Pair Corralation between Secoo Holding and PDD Holdings

Given the investment horizon of 90 days Secoo Holding is expected to generate 5.09 times more return on investment than PDD Holdings. However, Secoo Holding is 5.09 times more volatile than PDD Holdings. It trades about 0.03 of its potential returns per unit of risk. PDD Holdings is currently generating about 0.02 per unit of risk. If you would invest  206.00  in Secoo Holding on September 4, 2024 and sell it today you would lose (123.00) from holding Secoo Holding or give up 59.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.71%
Values	Daily Returns

Secoo Holding  vs.  PDD Holdings

Secoo Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Secoo Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Secoo Holding is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

PDD Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PDD Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, PDD Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Secoo Holding and PDD Holdings

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

The idea behind Secoo Holding and PDD Holdings 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.