Correlation Between Pintec Technology and Futu Holdings

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

Diversification Opportunities for Pintec Technology and Futu Holdings

0.6

Correlation Coefficient

Pintec Technology  Futu Holdings

Poor diversification

The 3 months correlation between Pintec and Futu is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pintec Technology Holdings and Futu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futu Holdings 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 Futu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futu Holdings has no effect on the direction of Pintec Technology i.e., Pintec Technology and Futu Holdings go up and down completely randomly.

Pair Corralation between Pintec Technology and Futu Holdings

Allowing for the 90-day total investment horizon Pintec Technology is expected to generate 2.13 times less return on investment than Futu Holdings. But when comparing it to its historical volatility, Pintec Technology Holdings is 1.89 times less risky than Futu Holdings. It trades about 0.11 of its potential returns per unit of risk. Futu Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,283  in Futu Holdings on December 27, 2024 and sell it today you would earn a total of  2,685  from holding Futu Holdings or generate 32.42% return on investment over 90 days.

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

Pintec Technology Holdings  vs.  Futu Holdings

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 weak basic indicators, Pintec Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Futu Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Futu Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Futu Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pintec Technology and Futu Holdings

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

The idea behind Pintec Technology Holdings and Futu 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.