Correlation Between Paysafe and Luxfer Holdings

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

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

Diversification Opportunities for Paysafe and Luxfer Holdings

-0.37

Correlation Coefficient

Paysafe  Luxfer Holdings

Very good diversification

The 3 months correlation between Paysafe and Luxfer is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC and Paysafe 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 Paysafe are associated (or correlated) with Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of Paysafe i.e., Paysafe and Luxfer Holdings go up and down completely randomly.

Pair Corralation between Paysafe and Luxfer Holdings

Given the investment horizon of 90 days Paysafe is expected to under-perform the Luxfer Holdings. In addition to that, Paysafe is 1.4 times more volatile than Luxfer Holdings PLC. It trades about -0.04 of its total potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.15 per unit of volatility. If you would invest  1,104  in Luxfer Holdings PLC on September 12, 2024 and sell it today you would earn a total of  313.00  from holding Luxfer Holdings PLC or generate 28.35% return on investment over 90 days.

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

Paysafe  vs.  Luxfer Holdings PLC

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Luxfer Holdings PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paysafe and Luxfer Holdings

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

The idea behind Paysafe and Luxfer Holdings PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.