Correlation Between Diageo PLC and Pintec Technology
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Pintec Technology 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 Diageo PLC and Pintec Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and Pintec Technology Holdings, you can compare the effects of market volatilities on Diageo PLC and Pintec Technology 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 Diageo PLC with a short position of Pintec Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Pintec Technology.
Diversification Opportunities for Diageo PLC and Pintec Technology
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Diageo and Pintec is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and Pintec Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pintec Technology and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with Pintec Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pintec Technology has no effect on the direction of Diageo PLC i.e., Diageo PLC and Pintec Technology go up and down completely randomly.
Pair Corralation between Diageo PLC and Pintec Technology
Considering the 90-day investment horizon Diageo PLC ADR is expected to generate 0.51 times more return on investment than Pintec Technology. However, Diageo PLC ADR is 1.97 times less risky than Pintec Technology. It trades about -0.06 of its potential returns per unit of risk. Pintec Technology Holdings is currently generating about -0.08 per unit of risk. If you would invest 12,379 in Diageo PLC ADR on October 8, 2024 and sell it today you would lose (241.00) from holding Diageo PLC ADR or give up 1.95% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Diageo PLC ADR vs. Pintec Technology Holdings
Performance |
Timeline |
Diageo PLC ADR |
Pintec Technology |
Diageo PLC and Pintec Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Diageo PLC and Pintec Technology
The main advantage of trading using opposite Diageo PLC and Pintec Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Pintec Technology 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 Pintec Technology will offset losses from the drop in Pintec Technology's long position.Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Brown Forman | Diageo PLC vs. Constellation Brands Class |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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