Correlation Between JD Sports and Pintec Technology

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

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

Diversification Opportunities for JD Sports and Pintec Technology

-0.21

Correlation Coefficient

JD Sports  Pintec Technology

Very good diversification

The 3 months correlation between JDDSF and Pintec is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Pintec Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pintec Technology and JD Sports 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 JD Sports Fashion 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 JD Sports i.e., JD Sports and Pintec Technology go up and down completely randomly.

Pair Corralation between JD Sports and Pintec Technology

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Pintec Technology. In addition to that, JD Sports is 1.42 times more volatile than Pintec Technology Holdings. It trades about -0.21 of its total potential returns per unit of risk. Pintec Technology Holdings is currently generating about 0.01 per unit of volatility. If you would invest  95.00  in Pintec Technology Holdings on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Pintec Technology Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

JD Sports Fashion  vs.  Pintec Technology Holdings

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JD Sports is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pintec Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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 comparatively stable basic indicators, Pintec Technology is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JD Sports and Pintec Technology

The main advantage of trading using opposite JD Sports and Pintec Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports 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 JD Sports Fashion 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.