Correlation Between Sapiens International and Paysafe

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

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

Diversification Opportunities for Sapiens International and Paysafe

0.25

Correlation Coefficient

Sapiens International  Paysafe

Modest diversification

The 3 months correlation between Sapiens and Paysafe is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe and Sapiens International 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 Sapiens International are associated (or correlated) with Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of Sapiens International i.e., Sapiens International and Paysafe go up and down completely randomly.

Pair Corralation between Sapiens International and Paysafe

Given the investment horizon of 90 days Sapiens International is expected to generate 0.42 times more return on investment than Paysafe. However, Sapiens International is 2.37 times less risky than Paysafe. It trades about 0.03 of its potential returns per unit of risk. Paysafe is currently generating about 0.0 per unit of risk. If you would invest  2,733  in Sapiens International on November 29, 2024 and sell it today you would earn a total of  60.00  from holding Sapiens International or generate 2.2% return on investment over 90 days.

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

Sapiens International  vs.  Paysafe

Sapiens International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sapiens International is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Paysafe

Risk-Adjusted Performance

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.

Pair Trading with Sapiens International and Paysafe

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

The idea behind Sapiens International and Paysafe 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.