Correlation Between Nasdaq and Pinduoduo
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Pinduoduo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Pinduoduo, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Pinduoduo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Pinduoduo.
Diversification Opportunities for Nasdaq and Pinduoduo
Pay attention - limited upside
The 3 months correlation between Nasdaq and Pinduoduo is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Pinduoduo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinduoduo and Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Pinduoduo go up and down completely randomly.
Pair Corralation between Nasdaq and Pinduoduo
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.3 times more return on investment than Pinduoduo. However, Nasdaq Inc is 3.29 times less risky than Pinduoduo. It trades about 0.14 of its potential returns per unit of risk. Pinduoduo is currently generating about -0.08 per unit of risk. If you would invest 7,235 in Nasdaq Inc on September 26, 2024 and sell it today you would earn a total of 657.00 from holding Nasdaq Inc or generate 9.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Nasdaq Inc vs. Pinduoduo
Performance |
Timeline |
Nasdaq Inc |
Pinduoduo |
Nasdaq and Pinduoduo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and Pinduoduo
The main advantage of trading using opposite Nasdaq and Pinduoduo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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.Pinduoduo vs. Amazon Inc | Pinduoduo vs. Amazon Inc | Pinduoduo vs. MEITUAN UNSPADR2B | Pinduoduo vs. Meituan |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
Transaction History View history of all your transactions and understand their impact on performance | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |