Correlation Between Qurate Retail and PDD Holdings

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

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

Diversification Opportunities for Qurate Retail and PDD Holdings

0.27

Correlation Coefficient

Qurate Retail  PDD Holdings

Modest diversification

The 3 months correlation between Qurate and PDD is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings and Qurate Retail 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 Qurate Retail Series 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 Qurate Retail i.e., Qurate Retail and PDD Holdings go up and down completely randomly.

Pair Corralation between Qurate Retail and PDD Holdings

Assuming the 90 days horizon Qurate Retail Series is expected to under-perform the PDD Holdings. In addition to that, Qurate Retail is 1.2 times more volatile than PDD Holdings. It trades about -0.05 of its total potential returns per unit of risk. PDD Holdings is currently generating about 0.01 per unit of volatility. If you would invest  9,775  in PDD Holdings on September 1, 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Qurate Retail Series  vs.  PDD Holdings

Qurate Retail Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qurate Retail Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Qurate Retail and PDD Holdings

The main advantage of trading using opposite Qurate Retail and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qurate Retail 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 Qurate Retail Series 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.