Correlation Between Papaya Growth and Signal Hill

Can any of the company-specific risk be diversified away by investing in both Papaya Growth and Signal Hill 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 Signal Hill 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 Signal Hill Acquisition, you can compare the effects of market volatilities on Papaya Growth and Signal Hill 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 Signal Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Papaya Growth and Signal Hill.

Diversification Opportunities for Papaya Growth and Signal Hill

0.29

Correlation Coefficient

Papaya Growth  Signal Hill

Modest diversification

The 3 months correlation between Papaya and Signal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity and Signal Hill Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signal Hill Acquisition 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 Signal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signal Hill Acquisition has no effect on the direction of Papaya Growth i.e., Papaya Growth and Signal Hill go up and down completely randomly.

Pair Corralation between Papaya Growth and Signal Hill

If you would invest  1,101  in Papaya Growth Opportunity on September 18, 2024 and sell it today you would earn a total of  18.00  from holding Papaya Growth Opportunity or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Papaya Growth Opportunity  vs.  Signal Hill Acquisition

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.

Signal Hill Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Papaya Growth and Signal Hill

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

The idea behind Papaya Growth Opportunity and Signal Hill Acquisition 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.