Correlation Between Confluent and Splitit Payments

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

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

Diversification Opportunities for Confluent and Splitit Payments

-0.53

Correlation Coefficient

Confluent  Splitit Payments

Excellent diversification

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

Pair Corralation between Confluent and Splitit Payments

Given the investment horizon of 90 days Confluent is expected to under-perform the Splitit Payments. But the stock apears to be less risky and, when comparing its historical volatility, Confluent is 26.81 times less risky than Splitit Payments. The stock trades about -0.02 of its potential returns per unit of risk. The Splitit Payments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Splitit Payments on December 22, 2024 and sell it today you would earn a total of  0.01  from holding Splitit Payments or generate 9.223372036854776E16% return on investment over 90 days.

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

Confluent  vs.  Splitit Payments

Confluent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Confluent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Confluent is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Splitit Payments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Splitit Payments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Splitit Payments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Confluent and Splitit Payments

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

The idea behind Confluent and Splitit Payments 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.