Correlation Between Asure Software and Pentair PLC

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

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

Diversification Opportunities for Asure Software and Pentair PLC

0.44

Correlation Coefficient

Asure Software  Pentair PLC

Very weak diversification

The 3 months correlation between Asure and Pentair is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Asure Software and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Asure 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 Asure Software are associated (or correlated) with Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of Asure Software i.e., Asure Software and Pentair PLC go up and down completely randomly.

Pair Corralation between Asure Software and Pentair PLC

Given the investment horizon of 90 days Asure Software is expected to generate 2.41 times more return on investment than Pentair PLC. However, Asure Software is 2.41 times more volatile than Pentair PLC. It trades about 0.04 of its potential returns per unit of risk. Pentair PLC is currently generating about -0.12 per unit of risk. If you would invest  941.00  in Asure Software on December 28, 2024 and sell it today you would earn a total of  54.00  from holding Asure Software or generate 5.74% return on investment over 90 days.

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

Asure Software  vs.  Pentair PLC

Asure Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asure Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pentair PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pentair PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Asure Software and Pentair PLC

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

The idea behind Asure Software and Pentair PLC 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.