Correlation Between Papaya Growth and Sandstorm Gold

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

Diversification Opportunities for Papaya Growth and Sandstorm Gold

0.0

Correlation Coefficient

Papaya Growth  Sandstorm Gold

Pay attention - limited upside

The 3 months correlation between Papaya and Sandstorm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Papaya Growth i.e., Papaya Growth and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Papaya Growth and Sandstorm Gold

If you would invest  554.00  in Sandstorm Gold Ltd on December 30, 2024 and sell it today you would earn a total of  203.00  from holding Sandstorm Gold Ltd or generate 36.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Papaya Growth Opportunity  vs.  Sandstorm Gold Ltd

Papaya Growth Opportunity

Risk-Adjusted Performance

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.

Sandstorm Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Sandstorm Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Papaya Growth and Sandstorm Gold

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

The idea behind Papaya Growth Opportunity and Sandstorm Gold Ltd 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.