Correlation Between Dassault Systemes and Pegasystems

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

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

Diversification Opportunities for Dassault Systemes and Pegasystems

-0.53

Correlation Coefficient

Dassault Systemes  Pegasystems

Excellent diversification

The 3 months correlation between Dassault and Pegasystems is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Pegasystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasystems and Dassault Systemes 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 Dassault Systemes SE are associated (or correlated) with Pegasystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasystems has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Pegasystems go up and down completely randomly.

Pair Corralation between Dassault Systemes and Pegasystems

Assuming the 90 days horizon Dassault Systemes SE is expected to generate 0.71 times more return on investment than Pegasystems. However, Dassault Systemes SE is 1.4 times less risky than Pegasystems. It trades about 0.14 of its potential returns per unit of risk. Pegasystems is currently generating about -0.1 per unit of risk. If you would invest  3,441  in Dassault Systemes SE on December 23, 2024 and sell it today you would earn a total of  739.00  from holding Dassault Systemes SE or generate 21.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

Dassault Systemes SE  vs.  Pegasystems

Dassault Systemes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Systemes SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Dassault Systemes reported solid returns over the last few months and may actually be approaching a breakup point.

Pegasystems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pegasystems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dassault Systemes and Pegasystems

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

The idea behind Dassault Systemes SE and Pegasystems 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.