Correlation Between Papaya Growth and Futuretech

Can any of the company-specific risk be diversified away by investing in both Papaya Growth and Futuretech 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 Futuretech 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 Futuretech II Acquisition, you can compare the effects of market volatilities on Papaya Growth and Futuretech 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 Futuretech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Papaya Growth and Futuretech.

Diversification Opportunities for Papaya Growth and Futuretech

0.11

Correlation Coefficient

Papaya Growth  Futuretech

Average diversification

The 3 months correlation between Papaya and Futuretech is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity and Futuretech II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuretech II Acquisition 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 Futuretech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuretech II Acquisition has no effect on the direction of Papaya Growth i.e., Papaya Growth and Futuretech go up and down completely randomly.

Pair Corralation between Papaya Growth and Futuretech

Assuming the 90 days horizon Papaya Growth Opportunity is not expected to generate positive returns. However, Papaya Growth Opportunity is 1.45 times less risky than Futuretech. It waists most of its returns potential to compensate for thr risk taken. Futuretech is generating about 0.01 per unit of risk. If you would invest  1,101  in Futuretech II Acquisition on September 3, 2024 and sell it today you would earn a total of  4.00  from holding Futuretech II Acquisition or generate 0.36% return on investment over 90 days.

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

Papaya Growth Opportunity  vs.  Futuretech II 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Futuretech II Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Papaya Growth and Futuretech

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

The idea behind Papaya Growth Opportunity and Futuretech II 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.