Correlation Between PayPal Holdings and Chewathai Public

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

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

Diversification Opportunities for PayPal Holdings and Chewathai Public

0.6

Correlation Coefficient

PayPal Holdings  Chewathai Public

Poor diversification

The 3 months correlation between PayPal and Chewathai is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Chewathai Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewathai Public and PayPal Holdings 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 PayPal Holdings are associated (or correlated) with Chewathai Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewathai Public has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Chewathai Public go up and down completely randomly.

Pair Corralation between PayPal Holdings and Chewathai Public

Given the investment horizon of 90 days PayPal Holdings is expected to generate 78.38 times less return on investment than Chewathai Public. But when comparing it to its historical volatility, PayPal Holdings is 20.19 times less risky than Chewathai Public. It trades about 0.01 of its potential returns per unit of risk. Chewathai Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Chewathai Public on December 2, 2024 and sell it today you would lose (40.00) from holding Chewathai Public or give up 58.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.17%
Values	Daily Returns

PayPal Holdings  vs.  Chewathai Public

PayPal Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PayPal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Chewathai Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chewathai Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PayPal Holdings and Chewathai Public

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

The idea behind PayPal Holdings and Chewathai Public 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.