Correlation Between Paycom Soft and Space Shuttle

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

By analyzing existing cross correlation between Paycom Soft and Space Shuttle Hi Tech, you can compare the effects of market volatilities on Paycom Soft and Space Shuttle 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 Paycom Soft with a short position of Space Shuttle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Soft and Space Shuttle.

Diversification Opportunities for Paycom Soft and Space Shuttle

-0.76

Correlation Coefficient

Paycom Soft  Space Shuttle

Pay attention - limited upside

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

Pair Corralation between Paycom Soft and Space Shuttle

Given the investment horizon of 90 days Paycom Soft is expected to generate 0.85 times more return on investment than Space Shuttle. However, Paycom Soft is 1.17 times less risky than Space Shuttle. It trades about 0.04 of its potential returns per unit of risk. Space Shuttle Hi Tech is currently generating about 0.02 per unit of risk. If you would invest  20,195  in Paycom Soft on September 13, 2024 and sell it today you would earn a total of  3,830  from holding Paycom Soft or generate 18.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.98%
Values	Daily Returns

Paycom Soft  vs.  Space Shuttle Hi Tech

Paycom Soft

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Paycom Soft exhibited solid returns over the last few months and may actually be approaching a breakup point.

Space Shuttle Hi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Shuttle Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Space Shuttle is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Paycom Soft and Space Shuttle

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

The idea behind Paycom Soft and Space Shuttle Hi Tech 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.

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 the Transaction History module to view history of all your transactions and understand their impact on performance.