Correlation Between T Mobile and Pinduoduo

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

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

Diversification Opportunities for T Mobile and Pinduoduo

-0.56

Correlation Coefficient

T Mobile  Pinduoduo

Excellent diversification

The 3 months correlation between T1MU34 and Pinduoduo is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Pinduoduo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinduoduo and T Mobile 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 T Mobile are associated (or correlated) with Pinduoduo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinduoduo has no effect on the direction of T Mobile i.e., T Mobile and Pinduoduo go up and down completely randomly.

Pair Corralation between T Mobile and Pinduoduo

Assuming the 90 days trading horizon T Mobile is expected to generate 0.54 times more return on investment than Pinduoduo. However, T Mobile is 1.84 times less risky than Pinduoduo. It trades about -0.01 of its potential returns per unit of risk. Pinduoduo is currently generating about -0.02 per unit of risk. If you would invest  64,912  in T Mobile on October 26, 2024 and sell it today you would lose (1,034) from holding T Mobile or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

T Mobile  vs.  Pinduoduo

T Mobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, T Mobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pinduoduo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinduoduo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Pinduoduo is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Mobile and Pinduoduo

The main advantage of trading using opposite T Mobile and Pinduoduo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile position performs unexpectedly, Pinduoduo 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 Pinduoduo will offset losses from the drop in Pinduoduo's long position.

The idea behind T Mobile and Pinduoduo 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.