Correlation Between Pintec Technology and Freedom Holding

Can any of the company-specific risk be diversified away by investing in both Pintec Technology and Freedom Holding 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 Freedom Holding 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 Freedom Holding Corp, you can compare the effects of market volatilities on Pintec Technology and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pintec Technology and Freedom Holding.

Diversification Opportunities for Pintec Technology and Freedom Holding

0.48

Correlation Coefficient

Pintec Technology  Freedom Holding

Very weak diversification

The 3 months correlation between Pintec and Freedom is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pintec Technology Holdings and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Pintec Technology i.e., Pintec Technology and Freedom Holding go up and down completely randomly.

Pair Corralation between Pintec Technology and Freedom Holding

Allowing for the 90-day total investment horizon Pintec Technology Holdings is expected to generate 1.78 times more return on investment than Freedom Holding. However, Pintec Technology is 1.78 times more volatile than Freedom Holding Corp. It trades about 0.04 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.08 per unit of risk. If you would invest  58.00  in Pintec Technology Holdings on November 28, 2024 and sell it today you would earn a total of  37.00  from holding Pintec Technology Holdings or generate 63.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Pintec Technology Holdings  vs.  Freedom Holding Corp

Pintec Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pintec Technology Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pintec Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Freedom Holding Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pintec Technology and Freedom Holding

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

The idea behind Pintec Technology Holdings and Freedom Holding Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.