Correlation Between Encore Capital and Up Fintech

Can any of the company-specific risk be diversified away by investing in both Encore Capital and Up Fintech 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 Encore Capital and Up Fintech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Encore Capital Group and Up Fintech Holding, you can compare the effects of market volatilities on Encore Capital and Up Fintech 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 Encore Capital with a short position of Up Fintech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Up Fintech.

Diversification Opportunities for Encore Capital and Up Fintech

-0.39

Correlation Coefficient

Encore Capital  Up Fintech

Very good diversification

The 3 months correlation between Encore and TIGR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Up Fintech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Up Fintech Holding and Encore Capital 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 Encore Capital Group are associated (or correlated) with Up Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Up Fintech Holding has no effect on the direction of Encore Capital i.e., Encore Capital and Up Fintech go up and down completely randomly.

Pair Corralation between Encore Capital and Up Fintech

Given the investment horizon of 90 days Encore Capital is expected to generate 187.37 times less return on investment than Up Fintech. But when comparing it to its historical volatility, Encore Capital Group is 2.47 times less risky than Up Fintech. It trades about 0.0 of its potential returns per unit of risk. Up Fintech Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Up Fintech Holding on September 12, 2024 and sell it today you would earn a total of  350.00  from holding Up Fintech Holding or generate 111.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Encore Capital Group  vs.  Up Fintech Holding

Encore Capital Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Encore Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Up Fintech Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Up Fintech Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Up Fintech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Encore Capital and Up Fintech

The main advantage of trading using opposite Encore Capital and Up Fintech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Up Fintech 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 Up Fintech will offset losses from the drop in Up Fintech's long position.

The idea behind Encore Capital Group and Up Fintech Holding 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.