Correlation Between Tinybeans Group and PayPal Holdings

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

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

Diversification Opportunities for Tinybeans Group and PayPal Holdings

-0.24

Correlation Coefficient

Tinybeans Group  PayPal Holdings

Very good diversification

The 3 months correlation between Tinybeans and PayPal is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Tinybeans Group Limited and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and Tinybeans Group 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 Tinybeans Group Limited are associated (or correlated) with PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Tinybeans Group i.e., Tinybeans Group and PayPal Holdings go up and down completely randomly.

Pair Corralation between Tinybeans Group and PayPal Holdings

Assuming the 90 days horizon Tinybeans Group Limited is expected to generate 28.29 times more return on investment than PayPal Holdings. However, Tinybeans Group is 28.29 times more volatile than PayPal Holdings. It trades about 0.09 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.21 per unit of risk. If you would invest  1.00  in Tinybeans Group Limited on September 12, 2024 and sell it today you would lose (0.50) from holding Tinybeans Group Limited or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Tinybeans Group Limited  vs.  PayPal Holdings

Tinybeans Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tinybeans Group Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tinybeans Group reported solid returns over the last few months and may actually be approaching a breakup point.

PayPal Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tinybeans Group and PayPal Holdings

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

The idea behind Tinybeans Group Limited and PayPal 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.