Correlation Between Mastercard and Pintec Technology

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

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

Diversification Opportunities for Mastercard and Pintec Technology

0.31

Correlation Coefficient

Mastercard  Pintec Technology

Weak diversification

The 3 months correlation between Mastercard and Pintec is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Pintec Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pintec Technology and Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and Pintec Technology go up and down completely randomly.

Pair Corralation between Mastercard and Pintec Technology

Allowing for the 90-day total investment horizon Mastercard is expected to generate 4.67 times less return on investment than Pintec Technology. But when comparing it to its historical volatility, Mastercard is 1.86 times less risky than Pintec Technology. It trades about 0.04 of its potential returns per unit of risk. Pintec Technology Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Pintec Technology Holdings on December 28, 2024 and sell it today you would earn a total of  14.00  from holding Pintec Technology Holdings or generate 15.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mastercard  vs.  Pintec Technology Holdings

Mastercard

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mastercard 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pintec Technology Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Pintec Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mastercard and Pintec Technology

The main advantage of trading using opposite Mastercard and Pintec Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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 Mastercard 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.