Correlation Between Papaya Growth and SFL

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

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

Diversification Opportunities for Papaya Growth and SFL

0.18

Correlation Coefficient

Papaya Growth  SFL

Average diversification

The 3 months correlation between Papaya and SFL is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation and Papaya Growth 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 Papaya Growth Opportunity are associated (or correlated) with SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Papaya Growth i.e., Papaya Growth and SFL go up and down completely randomly.

Pair Corralation between Papaya Growth and SFL

Assuming the 90 days horizon Papaya Growth Opportunity is not expected to generate positive returns. However, Papaya Growth Opportunity is 2.44 times less risky than SFL. It waists most of its returns potential to compensate for thr risk taken. SFL is generating about -0.07 per unit of risk. If you would invest  1,120  in Papaya Growth Opportunity on August 31, 2024 and sell it today you would lose (1.00) from holding Papaya Growth Opportunity or give up 0.09% of portfolio value over 90 days.

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

Papaya Growth Opportunity  vs.  SFL Corp.

Papaya Growth Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Papaya Growth Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Papaya Growth is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SFL Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, SFL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Papaya Growth and SFL

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

The idea behind Papaya Growth Opportunity and SFL Corporation 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 Transaction History module to view history of all your transactions and understand their impact on performance.