Correlation Between Hivemapper and PAY

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

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

Diversification Opportunities for Hivemapper and PAY

0.26

Correlation Coefficient

Hivemapper  PAY

Modest diversification

The 3 months correlation between Hivemapper and PAY is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hivemapper and PAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAY and Hivemapper 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 Hivemapper are associated (or correlated) with PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAY has no effect on the direction of Hivemapper i.e., Hivemapper and PAY go up and down completely randomly.

Pair Corralation between Hivemapper and PAY

Assuming the 90 days trading horizon Hivemapper is expected to generate 1.48 times less return on investment than PAY. But when comparing it to its historical volatility, Hivemapper is 1.4 times less risky than PAY. It trades about 0.02 of its potential returns per unit of risk. PAY is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.72  in PAY on September 1, 2024 and sell it today you would lose (0.07) from holding PAY or give up 9.69% of portfolio value over 90 days.

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

Hivemapper  vs.  PAY

Hivemapper

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hivemapper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Hivemapper may actually be approaching a critical reversion point that can send shares even higher in December 2024.

PAY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PAY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, PAY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hivemapper and PAY

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

The idea behind Hivemapper and PAY 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.