Correlation Between Papaya Growth and Ace Global

Can any of the company-specific risk be diversified away by investing in both Papaya Growth and Ace Global 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 Papaya Growth and Ace Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Papaya Growth Opportunity and Ace Global Business, you can compare the effects of market volatilities on Papaya Growth and Ace Global 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 Papaya Growth with a short position of Ace Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Papaya Growth and Ace Global.

Diversification Opportunities for Papaya Growth and Ace Global

0.55

Correlation Coefficient

Papaya Growth  Ace Global

Very weak diversification

The 3 months correlation between Papaya and Ace is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity and Ace Global Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Global Business and Papaya Growth 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 Papaya Growth Opportunity are associated (or correlated) with Ace Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Global Business has no effect on the direction of Papaya Growth i.e., Papaya Growth and Ace Global go up and down completely randomly.

Pair Corralation between Papaya Growth and Ace Global

Assuming the 90 days horizon Papaya Growth Opportunity is expected to generate 4.02 times more return on investment than Ace Global. However, Papaya Growth is 4.02 times more volatile than Ace Global Business. It trades about 0.03 of its potential returns per unit of risk. Ace Global Business is currently generating about -0.04 per unit of risk. If you would invest  1,080  in Papaya Growth Opportunity on March 14, 2024 and sell it today you would earn a total of  35.00  from holding Papaya Growth Opportunity or generate 3.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	43.55%
Values	Daily Returns

Papaya Growth Opportunity  vs.  Ace Global Business

Papaya Growth Opportunity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Papaya Growth Opportunity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Papaya Growth is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ace Global Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ace Global Business has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Ace Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Papaya Growth and Ace Global

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

The idea behind Papaya Growth Opportunity and Ace Global Business 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..