Correlation Between Pintec Technology and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Pintec Technology and LGI Homes 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 LGI Homes 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 LGI Homes, you can compare the effects of market volatilities on Pintec Technology and LGI Homes 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 LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pintec Technology and LGI Homes.
Diversification Opportunities for Pintec Technology and LGI Homes
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pintec and LGI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pintec Technology Holdings and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes 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 LGI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI Homes has no effect on the direction of Pintec Technology i.e., Pintec Technology and LGI Homes go up and down completely randomly.
Pair Corralation between Pintec Technology and LGI Homes
Allowing for the 90-day total investment horizon Pintec Technology Holdings is expected to generate 1.56 times more return on investment than LGI Homes. However, Pintec Technology is 1.56 times more volatile than LGI Homes. It trades about 0.07 of its potential returns per unit of risk. LGI Homes is currently generating about 0.02 per unit of risk. If you would invest 39.00 in Pintec Technology Holdings on August 28, 2024 and sell it today you would earn a total of 61.00 from holding Pintec Technology Holdings or generate 156.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Pintec Technology Holdings vs. LGI Homes
Performance |
| Timeline |
| Pintec Technology |
| LGI Homes |
Pintec Technology and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pintec Technology and LGI Homes
The main advantage of trading using opposite Pintec Technology and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pintec Technology position performs unexpectedly, LGI Homes 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 LGI Homes will offset losses from the drop in LGI Homes' long position.| Pintec Technology vs. Senmiao Technology | Pintec Technology vs. X Financial Class | Pintec Technology vs. Yirendai | Pintec Technology vs. Qudian Inc |
| LGI Homes vs. MI Homes | LGI Homes vs. Taylor Morn Home | LGI Homes vs. TRI Pointe Homes | LGI Homes vs. Beazer Homes USA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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