Correlation Between Pintec Technology and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Pintec Technology and Discover Financial 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 Pintec Technology and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pintec Technology Holdings and Discover Financial Services, you can compare the effects of market volatilities on Pintec Technology and Discover Financial 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 Pintec Technology with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pintec Technology and Discover Financial.
Diversification Opportunities for Pintec Technology and Discover Financial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pintec and Discover is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pintec Technology Holdings and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Pintec Technology 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 Pintec Technology Holdings are associated (or correlated) with Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Pintec Technology i.e., Pintec Technology and Discover Financial go up and down completely randomly.
Pair Corralation between Pintec Technology and Discover Financial
Allowing for the 90-day total investment horizon Pintec Technology is expected to generate 2.87 times less return on investment than Discover Financial. In addition to that, Pintec Technology is 1.26 times more volatile than Discover Financial Services. It trades about 0.02 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.07 per unit of volatility. If you would invest 11,213 in Discover Financial Services on August 28, 2024 and sell it today you would earn a total of 7,054 from holding Discover Financial Services or generate 62.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Pintec Technology Holdings vs. Discover Financial Services
Performance |
| Timeline |
| Pintec Technology |
| Discover Financial |
Pintec Technology and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pintec Technology and Discover Financial
The main advantage of trading using opposite Pintec Technology and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pintec Technology position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| Pintec Technology vs. Senmiao Technology | Pintec Technology vs. X Financial Class | Pintec Technology vs. Yirendai | Pintec Technology vs. Qudian Inc |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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