Correlation Between Paycom Soft and Bavarian Nordic

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

By analyzing existing cross correlation between Paycom Soft and Bavarian Nordic, you can compare the effects of market volatilities on Paycom Soft and Bavarian Nordic 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 Bavarian Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Soft and Bavarian Nordic.

Diversification Opportunities for Paycom Soft and Bavarian Nordic

-0.74

Correlation Coefficient

Paycom Soft  Bavarian Nordic

Pay attention - limited upside

The 3 months correlation between Paycom and Bavarian is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Bavarian Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic 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 Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic has no effect on the direction of Paycom Soft i.e., Paycom Soft and Bavarian Nordic go up and down completely randomly.

Pair Corralation between Paycom Soft and Bavarian Nordic

Given the investment horizon of 90 days Paycom Soft is expected to generate 0.94 times more return on investment than Bavarian Nordic. However, Paycom Soft is 1.06 times less risky than Bavarian Nordic. It trades about 0.2 of its potential returns per unit of risk. Bavarian Nordic is currently generating about -0.12 per unit of risk. If you would invest  16,103  in Paycom Soft on September 3, 2024 and sell it today you would earn a total of  7,089  from holding Paycom Soft or generate 44.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Paycom Soft  vs.  Bavarian Nordic

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.

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Paycom Soft and Bavarian Nordic

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

The idea behind Paycom Soft and Bavarian Nordic 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.