Correlation Between Papaya Growth and Atlantic Coastal

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

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

Diversification Opportunities for Papaya Growth and Atlantic Coastal

0.16

Correlation Coefficient

Papaya Growth  Atlantic Coastal

Average diversification

The 3 months correlation between Papaya and Atlantic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity and Atlantic Coastal Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Coastal Acq and Papaya Growth 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 Papaya Growth Opportunity are associated (or correlated) with Atlantic Coastal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Coastal Acq has no effect on the direction of Papaya Growth i.e., Papaya Growth and Atlantic Coastal go up and down completely randomly.

Pair Corralation between Papaya Growth and Atlantic Coastal

Assuming the 90 days horizon Papaya Growth Opportunity is expected to generate 0.71 times more return on investment than Atlantic Coastal. However, Papaya Growth Opportunity is 1.41 times less risky than Atlantic Coastal. It trades about 0.02 of its potential returns per unit of risk. Atlantic Coastal Acquisition is currently generating about -0.03 per unit of risk. If you would invest  1,069  in Papaya Growth Opportunity on October 6, 2024 and sell it today you would earn a total of  50.00  from holding Papaya Growth Opportunity or generate 4.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.0%
Values	Daily Returns

Papaya Growth Opportunity  vs.  Atlantic Coastal Acquisition

Papaya Growth Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Atlantic Coastal Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Coastal Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Papaya Growth and Atlantic Coastal

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

The idea behind Papaya Growth Opportunity and Atlantic Coastal Acquisition 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 CEOs Directory module to screen CEOs from public companies around the world.