Correlation Between Universal and Papaya Growth

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

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

Diversification Opportunities for Universal and Papaya Growth

0.32

Correlation Coefficient

Universal  Papaya Growth

Weak diversification

The 3 months correlation between Universal and Papaya is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Papaya Growth Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papaya Growth Opportunity and Universal 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 Universal are associated (or correlated) with Papaya Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papaya Growth Opportunity has no effect on the direction of Universal i.e., Universal and Papaya Growth go up and down completely randomly.

Pair Corralation between Universal and Papaya Growth

Considering the 90-day investment horizon Universal is expected to generate 1.21 times more return on investment than Papaya Growth. However, Universal is 1.21 times more volatile than Papaya Growth Opportunity. It trades about 0.03 of its potential returns per unit of risk. Papaya Growth Opportunity is currently generating about 0.02 per unit of risk. If you would invest  4,712  in Universal on September 4, 2024 and sell it today you would earn a total of  1,006  from holding Universal or generate 21.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Universal  vs.  Papaya Growth Opportunity

Universal

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Universal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Papaya Growth Opportunity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Papaya Growth Opportunity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Universal and Papaya Growth

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

The idea behind Universal and Papaya Growth Opportunity 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.