I am not sure pivot_table would help here, but here is what you can do
First we groupby on 'Discount Group' and put all 'Product ID' into a list:
df2 = df.groupby('Discount Group')['Product ID'].apply(list).reset_index()
df2
we get
Discount Group Product ID
-- ---------------- -------------------
0 1 ['shirt', 'jacket']
1 2 ['dress', 'pants']
2 3 ['shirt', 'jacket']
3 4 ['dress']
4 5 ['hat']
Next we want to make a 'cartesian product' of this df with itself. For that we do an outer merge on a constant key
df2['key'] = 0
df3 = df2.merge(df2, on = 'key', how = 'outer').drop(columns=['key'])
df3
we get this
Discount Group_x Product ID_x Discount Group_y Product ID_y
-- ------------------ ------------------- ------------------ -------------------
0 1 ['shirt', 'jacket'] 1 ['shirt', 'jacket']
1 1 ['shirt', 'jacket'] 2 ['dress', 'pants']
2 1 ['shirt', 'jacket'] 3 ['shirt', 'jacket']
3 1 ['shirt', 'jacket'] 4 ['dress']
4 1 ['shirt', 'jacket'] 5 ['hat']
5 2 ['dress', 'pants'] 1 ['shirt', 'jacket']
6 2 ['dress', 'pants'] 2 ['dress', 'pants']
7 2 ['dress', 'pants'] 3 ['shirt', 'jacket']
8 2 ['dress', 'pants'] 4 ['dress']
9 2 ['dress', 'pants'] 5 ['hat']
10 3 ['shirt', 'jacket'] 1 ['shirt', 'jacket']
11 3 ['shirt', 'jacket'] 2 ['dress', 'pants']
12 3 ['shirt', 'jacket'] 3 ['shirt', 'jacket']
13 3 ['shirt', 'jacket'] 4 ['dress']
14 3 ['shirt', 'jacket'] 5 ['hat']
15 4 ['dress'] 1 ['shirt', 'jacket']
16 4 ['dress'] 2 ['dress', 'pants']
17 4 ['dress'] 3 ['shirt', 'jacket']
18 4 ['dress'] 4 ['dress']
19 4 ['dress'] 5 ['hat']
20 5 ['hat'] 1 ['shirt', 'jacket']
21 5 ['hat'] 2 ['dress', 'pants']
22 5 ['hat'] 3 ['shirt', 'jacket']
23 5 ['hat'] 4 ['dress']
24 5 ['hat'] 5 ['hat']
Note how we got each pair of 'Discount Group' and corresponding 'Product ID' on a separate row
Next, for each row, we count the number of products that exist in lists in 'Product ID_x' and 'Product ID_y' and put that into 'count' column
df3['count'] = df3.apply(lambda row : len(set(row['Product ID_x'])&set(row['Product ID_y'])), axis = 1)[
df3
so it looks like this
Discount Group_x Product ID_x Discount Group_y Product ID_y count
-- ------------------ ------------------- ------------------ ------------------- -------
0 1 ['shirt', 'jacket'] 1 ['shirt', 'jacket'] 2
1 1 ['shirt', 'jacket'] 2 ['dress', 'pants'] 0
2 1 ['shirt', 'jacket'] 3 ['shirt', 'jacket'] 2
3 1 ['shirt', 'jacket'] 4 ['dress'] 0
4 1 ['shirt', 'jacket'] 5 ['hat'] 0
5 2 ['dress', 'pants'] 1 ['shirt', 'jacket'] 0
6 2 ['dress', 'pants'] 2 ['dress', 'pants'] 2
7 2 ['dress', 'pants'] 3 ['shirt', 'jacket'] 0
8 2 ['dress', 'pants'] 4 ['dress'] 1
9 2 ['dress', 'pants'] 5 ['hat'] 0
10 3 ['shirt', 'jacket'] 1 ['shirt', 'jacket'] 2
11 3 ['shirt', 'jacket'] 2 ['dress', 'pants'] 0
12 3 ['shirt', 'jacket'] 3 ['shirt', 'jacket'] 2
13 3 ['shirt', 'jacket'] 4 ['dress'] 0
14 3 ['shirt', 'jacket'] 5 ['hat'] 0
15 4 ['dress'] 1 ['shirt', 'jacket'] 0
16 4 ['dress'] 2 ['dress', 'pants'] 1
17 4 ['dress'] 3 ['shirt', 'jacket'] 0
18 4 ['dress'] 4 ['dress'] 1
19 4 ['dress'] 5 ['hat'] 0
20 5 ['hat'] 1 ['shirt', 'jacket'] 0
21 5 ['hat'] 2 ['dress', 'pants'] 0
22 5 ['hat'] 3 ['shirt', 'jacket'] 0
23 5 ['hat'] 4 ['dress'] 0
24 5 ['hat'] 5 ['hat'] 1
and we are almost done -- set the index and unstack:
df3.set_index(['Discount Group_x','Discount Group_y'])['count'].unstack(level = 1)
to get
Discount Group_y 1 2 3 4 5
Discount Group_x
1 2 0 2 0 0
2 0 2 0 1 0
3 2 0 2 0 0
4 0 1 0 1 0
5 0 0 0 0 1
Another answer that uses less memory
... but somewhat uglier
from itertools import product
s = df.groupby('Discount Group')['Product ID'].apply(list)
pairs = [[(p[0][0],p[1][0]),(p[0][1] ,p[1][1])] for p in product(s.items(),repeat = 2)]
count = [[p[0][0],p[0][1],len(set(p[1][0])&set(p[1][1]))] for p in pairs]
count
produces a list of lists with an Discount ID in first and second columns and the count of overlappping items:
[[1, 1, 2],
[1, 2, 0],
[1, 3, 2],
[1, 4, 0],
[1, 5, 0],
[2, 1, 0],
[2, 2, 2],
[2, 3, 0],
[2, 4, 1],
[2, 5, 0],
[3, 1, 2],
[3, 2, 0],
[3, 3, 2],
[3, 4, 0],
[3, 5, 0],
[4, 1, 0],
[4, 2, 1],
[4, 3, 0],
[4, 4, 1],
[4, 5, 0],
[5, 1, 0],
[5, 2, 0],
[5, 3, 0],
[5, 4, 0],
[5, 5, 1]]
Now we stick it into a df and unstack
pd.DataFrame(count).set_index([0,1]).unstack(level = 1)
produces
2
1 1 2 3 4 5
0
1 2 0 2 0 0
2 0 2 0 1 0
3 2 0 2 0 0
4 0 1 0 1 0
5 0 0 0 0 1