Correlation Between ESH Acquisition and Pintec Technology

Can any of the company-specific risk be diversified away by investing in both ESH Acquisition 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 ESH Acquisition and Pintec Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ESH Acquisition Corp and Pintec Technology Holdings, you can compare the effects of market volatilities on ESH Acquisition 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 ESH Acquisition with a short position of Pintec Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESH Acquisition and Pintec Technology.

Diversification Opportunities for ESH Acquisition and Pintec Technology

-0.16

Correlation Coefficient

ESH Acquisition  Pintec Technology

Good diversification

The 3 months correlation between ESH and Pintec is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ESH Acquisition Corp and Pintec Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pintec Technology and ESH Acquisition 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 ESH Acquisition Corp 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 ESH Acquisition i.e., ESH Acquisition and Pintec Technology go up and down completely randomly.

Pair Corralation between ESH Acquisition and Pintec Technology

Given the investment horizon of 90 days ESH Acquisition is expected to generate 127.35 times less return on investment than Pintec Technology. But when comparing it to its historical volatility, ESH Acquisition Corp is 2.88 times less risky than Pintec Technology. It trades about 0.0 of its potential returns per unit of risk. Pintec Technology Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Pintec Technology Holdings on December 27, 2024 and sell it today you would earn a total of  11.00  from holding Pintec Technology Holdings or generate 12.09% return on investment over 90 days.

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

ESH Acquisition Corp  vs.  Pintec Technology Holdings

ESH Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ESH Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, ESH Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pintec Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pintec Technology Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Pintec Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ESH Acquisition and Pintec Technology

The main advantage of trading using opposite ESH Acquisition and Pintec Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESH Acquisition 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.

The idea behind ESH Acquisition Corp and Pintec Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.