Correlation Between Azul SA and Paysafe

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Can any of the company-specific risk be diversified away by investing in both Azul SA 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 Azul SA and Paysafe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azul SA and Paysafe, you can compare the effects of market volatilities on Azul SA 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 Azul SA with a short position of Paysafe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and Paysafe.

Diversification Opportunities for Azul SA and Paysafe

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Azul and Paysafe is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe and Azul SA 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 Azul SA 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 Azul SA i.e., Azul SA and Paysafe go up and down completely randomly.

Pair Corralation between Azul SA and Paysafe

Given the investment horizon of 90 days Azul SA is expected to under-perform the Paysafe. In addition to that, Azul SA is 1.21 times more volatile than Paysafe. It trades about -0.15 of its total potential returns per unit of risk. Paysafe is currently generating about -0.06 per unit of volatility. If you would invest  2,221  in Paysafe on September 20, 2024 and sell it today you would lose (411.00) from holding Paysafe or give up 18.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Azul SA  vs.  Paysafe

 Performance 
       Timeline  
Azul SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Azul SA 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 basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Paysafe 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Azul SA and Paysafe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Azul SA and Paysafe

The main advantage of trading using opposite Azul SA and Paysafe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA 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 Azul SA 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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