Correlation Between Paypal Holdings and Astra Space

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

Diversification Opportunities for Paypal Holdings and Astra Space

-0.24
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Paypal Holdings and Astra Space

Given the investment horizon of 90 days Paypal Holdings is expected to generate 0.45 times more return on investment than Astra Space. However, Paypal Holdings is 2.2 times less risky than Astra Space. It trades about -0.1 of its potential returns per unit of risk. Astra Space is currently generating about -0.2 per unit of risk. If you would invest  9,161  in Paypal Holdings on July 5, 2022 and sell it today you would lose (554.00)  from holding Paypal Holdings or give up 6.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Paypal Holdings  vs.  Astra Space Inc

 Performance (%) 
       Timeline  
Paypal Holdings 
Paypal Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Paypal Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Paypal Holdings revealed solid returns over the last few months and may actually be approaching a breakup point.

Paypal Price Channel

Astra Space 
Astra Performance
0 of 100
Over the last 90 days Astra Space has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Astra Price Channel

Paypal Holdings and Astra Space Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Paypal Holdings and Astra Space

The main advantage of trading using opposite Paypal Holdings and Astra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paypal Holdings position performs unexpectedly, Astra Space 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 Astra Space will offset losses from the drop in Astra Space's long position.
The idea behind Paypal Holdings and Astra Space 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.
Astra Space vs. Amazon Inc
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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