Correlation Between Paysafe and SIMPPLE

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

By analyzing existing cross correlation between Paysafe and SIMPPLE LTD Ordinary, you can compare the effects of market volatilities on Paysafe and SIMPPLE 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 SIMPPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paysafe and SIMPPLE.

Diversification Opportunities for Paysafe and SIMPPLE

-0.48

Correlation Coefficient

Paysafe  SIMPPLE

Very good diversification

The 3 months correlation between Paysafe and SIMPPLE is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe and SIMPPLE LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMPPLE LTD Ordinary 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 SIMPPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMPPLE LTD Ordinary has no effect on the direction of Paysafe i.e., Paysafe and SIMPPLE go up and down completely randomly.

Pair Corralation between Paysafe and SIMPPLE

Given the investment horizon of 90 days Paysafe is expected to under-perform the SIMPPLE. But the stock apears to be less risky and, when comparing its historical volatility, Paysafe is 9.06 times less risky than SIMPPLE. The stock trades about -0.01 of its potential returns per unit of risk. The SIMPPLE LTD Ordinary is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  37.00  in SIMPPLE LTD Ordinary on September 3, 2024 and sell it today you would earn a total of  72.00  from holding SIMPPLE LTD Ordinary or generate 194.59% return on investment over 90 days.

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

Paysafe  vs.  SIMPPLE LTD Ordinary

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 rather sound technical and fundamental indicators, Paysafe is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SIMPPLE LTD Ordinary

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIMPPLE LTD Ordinary are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, SIMPPLE disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paysafe and SIMPPLE

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

The idea behind Paysafe and SIMPPLE LTD Ordinary 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.