Correlation Between Stem and Paymentus Holdings

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

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

Diversification Opportunities for Stem and Paymentus Holdings

-0.22

Correlation Coefficient

Stem  Paymentus Holdings

Very good diversification

The 3 months correlation between Stem and Paymentus is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and Paymentus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paymentus Holdings and Stem 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 Stem Inc are associated (or correlated) with Paymentus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paymentus Holdings has no effect on the direction of Stem i.e., Stem and Paymentus Holdings go up and down completely randomly.

Pair Corralation between Stem and Paymentus Holdings

Given the investment horizon of 90 days Stem is expected to generate 34.32 times less return on investment than Paymentus Holdings. But when comparing it to its historical volatility, Stem Inc is 1.12 times less risky than Paymentus Holdings. It trades about 0.01 of its potential returns per unit of risk. Paymentus Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,661  in Paymentus Holdings on September 13, 2024 and sell it today you would earn a total of  702.00  from holding Paymentus Holdings or generate 26.38% return on investment over 90 days.

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

Stem Inc  vs.  Paymentus Holdings

Stem Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Stem may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Paymentus Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paymentus Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Paymentus Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stem and Paymentus Holdings

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

The idea behind Stem Inc and Paymentus Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.