Correlation Between Unifique Telecomunicaes and Paycom Software

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

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

Diversification Opportunities for Unifique Telecomunicaes and Paycom Software

-0.39

Correlation Coefficient

Unifique Telecomunicaes  Paycom Software

Very good diversification

The 3 months correlation between Unifique and Paycom is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Unifique Telecomunicaes SA and Paycom Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycom Software and Unifique Telecomunicaes 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 Unifique Telecomunicaes SA are associated (or correlated) with Paycom Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycom Software has no effect on the direction of Unifique Telecomunicaes i.e., Unifique Telecomunicaes and Paycom Software go up and down completely randomly.

Pair Corralation between Unifique Telecomunicaes and Paycom Software

Assuming the 90 days trading horizon Unifique Telecomunicaes SA is expected to under-perform the Paycom Software. But the stock apears to be less risky and, when comparing its historical volatility, Unifique Telecomunicaes SA is 1.95 times less risky than Paycom Software. The stock trades about -0.06 of its potential returns per unit of risk. The Paycom Software is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,955  in Paycom Software on September 13, 2024 and sell it today you would earn a total of  1,635  from holding Paycom Software or generate 55.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Unifique Telecomunicaes SA  vs.  Paycom Software

Unifique Telecomunicaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unifique Telecomunicaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Paycom Software

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Software are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Paycom Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unifique Telecomunicaes and Paycom Software

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

The idea behind Unifique Telecomunicaes SA and Paycom Software 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.