Correlation Between Pintec Technology and LPL Financial

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

Diversification Opportunities for Pintec Technology and LPL Financial

-0.58

Correlation Coefficient

Pintec Technology  LPL Financial

Excellent diversification

The 3 months correlation between Pintec and LPL is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pintec Technology Holdings and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial 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 LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Pintec Technology i.e., Pintec Technology and LPL Financial go up and down completely randomly.

Pair Corralation between Pintec Technology and LPL Financial

Allowing for the 90-day total investment horizon Pintec Technology Holdings is expected to under-perform the LPL Financial. In addition to that, Pintec Technology is 1.1 times more volatile than LPL Financial Holdings. It trades about -0.05 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.27 per unit of volatility. If you would invest  28,054  in LPL Financial Holdings on September 2, 2024 and sell it today you would earn a total of  4,461  from holding LPL Financial Holdings or generate 15.9% return on investment over 90 days.

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

Pintec Technology Holdings  vs.  LPL Financial Holdings

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

LPL Financial Holdings

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, LPL Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pintec Technology and LPL Financial

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

The idea behind Pintec Technology Holdings and LPL Financial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.