Correlation Between CyberArk Software and AppTech Payments

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

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

Diversification Opportunities for CyberArk Software and AppTech Payments

-0.32

Correlation Coefficient

CyberArk Software  AppTech Payments

Very good diversification

The 3 months correlation between CyberArk and AppTech is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and AppTech Payments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppTech Payments Corp and CyberArk 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 CyberArk Software are associated (or correlated) with AppTech Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppTech Payments Corp has no effect on the direction of CyberArk Software i.e., CyberArk Software and AppTech Payments go up and down completely randomly.

Pair Corralation between CyberArk Software and AppTech Payments

Given the investment horizon of 90 days CyberArk Software is expected to generate 93.25 times less return on investment than AppTech Payments. But when comparing it to its historical volatility, CyberArk Software is 79.06 times less risky than AppTech Payments. It trades about 0.13 of its potential returns per unit of risk. AppTech Payments Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  23.00  in AppTech Payments Corp on September 4, 2024 and sell it today you would lose (7.00) from holding AppTech Payments Corp or give up 30.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.88%
Values	Daily Returns

CyberArk Software  vs.  AppTech Payments Corp

CyberArk Software

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental drivers, CyberArk Software reported solid returns over the last few months and may actually be approaching a breakup point.

AppTech Payments Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days AppTech Payments Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, AppTech Payments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CyberArk Software and AppTech Payments

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

The idea behind CyberArk Software and AppTech Payments Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.