Correlation Between Capital Bancorp and Paysign

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

By analyzing existing cross correlation between Capital Bancorp and Paysign, you can compare the effects of market volatilities on Capital Bancorp and Paysign 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 Capital Bancorp with a short position of Paysign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Bancorp and Paysign.

Diversification Opportunities for Capital Bancorp and Paysign

-0.53

Correlation Coefficient

Capital Bancorp  Paysign

Excellent diversification

The 3 months correlation between Capital and Paysign is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Capital Bancorp and Paysign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysign and Capital Bancorp 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 Capital Bancorp are associated (or correlated) with Paysign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysign has no effect on the direction of Capital Bancorp i.e., Capital Bancorp and Paysign go up and down completely randomly.

Pair Corralation between Capital Bancorp and Paysign

Given the investment horizon of 90 days Capital Bancorp is expected to generate 2.97 times less return on investment than Paysign. But when comparing it to its historical volatility, Capital Bancorp is 2.06 times less risky than Paysign. It trades about 0.04 of its potential returns per unit of risk. Paysign is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  302.00  in Paysign on January 19, 2024 and sell it today you would earn a total of  122.00  from holding Paysign or generate 40.4% return on investment over 90 days.

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

Capital Bancorp  vs.  Paysign

Capital Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Paysign

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paysign are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Paysign unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Bancorp and Paysign

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

The idea behind Capital Bancorp and Paysign 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.