Correlation Between Affirm Holdings and Uipath

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

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

Diversification Opportunities for Affirm Holdings and Uipath

0.78

Correlation Coefficient

Affirm Holdings  Uipath

Poor diversification

The 3 months correlation between Affirm and Uipath is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Affirm Holdings and Uipath Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uipath Inc and Affirm Holdings 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 Affirm Holdings are associated (or correlated) with Uipath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uipath Inc has no effect on the direction of Affirm Holdings i.e., Affirm Holdings and Uipath go up and down completely randomly.

Pair Corralation between Affirm Holdings and Uipath

Given the investment horizon of 90 days Affirm Holdings is expected to generate 1.51 times more return on investment than Uipath. However, Affirm Holdings is 1.51 times more volatile than Uipath Inc. It trades about -0.12 of its potential returns per unit of risk. Uipath Inc is currently generating about -0.27 per unit of risk. If you would invest  6,882  in Affirm Holdings on October 10, 2024 and sell it today you would lose (753.00) from holding Affirm Holdings or give up 10.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Affirm Holdings  vs.  Uipath Inc

Affirm Holdings

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Affirm Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Affirm Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Uipath Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uipath Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Uipath may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Affirm Holdings and Uipath

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

The idea behind Affirm Holdings and Uipath Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.