Correlation Between American Software and PTC

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

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

Diversification Opportunities for American Software and PTC

0.75

Correlation Coefficient

American Software  PTC

Poor diversification

The 3 months correlation between American and PTC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Software and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Inc and American Software 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 American Software are associated (or correlated) with PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of American Software i.e., American Software and PTC go up and down completely randomly.

Pair Corralation between American Software and PTC

If you would invest  1,077  in American Software on September 23, 2024 and sell it today you would earn a total of  0.00  from holding American Software or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

American Software  vs.  PTC Inc

American Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

PTC Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PTC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Software and PTC

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

The idea behind American Software and PTC Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.