Can any of the company-specific risk be diversified away by investing in both Pintec Technology and Metals Acquisition 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 Metals Acquisition 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 Metals Acquisition Limited, you can compare the effects of market volatilities on Pintec Technology and Metals Acquisition 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 Metals Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pintec Technology and Metals Acquisition.
Diversification Opportunities for Pintec Technology and Metals Acquisition
The 3 months correlation between Pintec and Metals is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pintec Technology Holdings and Metals Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Acquisition 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 Metals Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Acquisition has no effect on the direction of Pintec Technology i.e., Pintec Technology and Metals Acquisition go up and down completely randomly.
Pair Corralation between Pintec Technology and Metals Acquisition
Allowing for the 90-day total investment horizon Pintec Technology Holdings is expected to generate 4.99 times more return on investment than Metals Acquisition. However, Pintec Technology is 4.99 times more volatile than Metals Acquisition Limited. It trades about 0.02 of its potential returns per unit of risk. Metals Acquisition Limited is currently generating about 0.05 per unit of risk. If you would invest 220.00 in Pintec Technology Holdings on March 6, 2024 and sell it today you would lose (110.00) from holding Pintec Technology Holdings or give up 50.0% of portfolio value over 90 days.
Over the last 90 days Pintec Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Metals Acquisition Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Metals Acquisition disclosed solid returns over the last few months and may actually be approaching a breakup point.