Correlation Between Associated Capital and Papaya Growth

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

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

Diversification Opportunities for Associated Capital and Papaya Growth

0.32

Correlation Coefficient

Associated Capital  Papaya Growth

Weak diversification

The 3 months correlation between Associated and Papaya is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Papaya Growth Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papaya Growth Opportunity and Associated Capital 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 Associated Capital Group are associated (or correlated) with Papaya Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papaya Growth Opportunity has no effect on the direction of Associated Capital i.e., Associated Capital and Papaya Growth go up and down completely randomly.

Pair Corralation between Associated Capital and Papaya Growth

Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 20.53 times more return on investment than Papaya Growth. However, Associated Capital is 20.53 times more volatile than Papaya Growth Opportunity. It trades about 0.1 of its potential returns per unit of risk. Papaya Growth Opportunity is currently generating about 0.09 per unit of risk. If you would invest  3,129  in Associated Capital Group on September 5, 2024 and sell it today you would earn a total of  383.00  from holding Associated Capital Group or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Associated Capital Group  vs.  Papaya Growth Opportunity

Associated Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Papaya Growth Opportunity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Papaya Growth Opportunity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Papaya Growth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Associated Capital and Papaya Growth

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

The idea behind Associated Capital Group and Papaya Growth Opportunity 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.