Correlation Between Agilysys and Paylocity Holdng

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

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

Diversification Opportunities for Agilysys and Paylocity Holdng

0.76

Correlation Coefficient

Agilysys  Paylocity Holdng

Poor diversification

The 3 months correlation between Agilysys and Paylocity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Agilysys and Paylocity Holdng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paylocity Holdng and Agilysys 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 Agilysys are associated (or correlated) with Paylocity Holdng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paylocity Holdng has no effect on the direction of Agilysys i.e., Agilysys and Paylocity Holdng go up and down completely randomly.

Pair Corralation between Agilysys and Paylocity Holdng

Given the investment horizon of 90 days Agilysys is expected to generate 1.46 times more return on investment than Paylocity Holdng. However, Agilysys is 1.46 times more volatile than Paylocity Holdng. It trades about 0.16 of its potential returns per unit of risk. Paylocity Holdng is currently generating about 0.21 per unit of risk. If you would invest  10,292  in Agilysys on September 15, 2024 and sell it today you would earn a total of  3,001  from holding Agilysys or generate 29.16% return on investment over 90 days.

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

Agilysys  vs.  Paylocity Holdng

Agilysys

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilysys are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Agilysys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Paylocity Holdng

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with Agilysys and Paylocity Holdng

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

The idea behind Agilysys and Paylocity Holdng 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.