Correlation Between DLH Holdings and Paycor HCM

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

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

Diversification Opportunities for DLH Holdings and Paycor HCM

-0.64

Correlation Coefficient

DLH Holdings  Paycor HCM

Excellent diversification

The 3 months correlation between DLH and Paycor is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Paycor HCM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycor HCM and DLH Holdings 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 DLH Holdings Corp are associated (or correlated) with Paycor HCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycor HCM has no effect on the direction of DLH Holdings i.e., DLH Holdings and Paycor HCM go up and down completely randomly.

Pair Corralation between DLH Holdings and Paycor HCM

Given the investment horizon of 90 days DLH Holdings Corp is expected to under-perform the Paycor HCM. In addition to that, DLH Holdings is 1.07 times more volatile than Paycor HCM. It trades about -0.03 of its total potential returns per unit of risk. Paycor HCM is currently generating about -0.02 per unit of volatility. If you would invest  2,315  in Paycor HCM on October 4, 2024 and sell it today you would lose (458.00) from holding Paycor HCM or give up 19.78% of portfolio value over 90 days.

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

DLH Holdings Corp  vs.  Paycor HCM

DLH Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Paycor HCM

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paycor HCM are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Paycor HCM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DLH Holdings and Paycor HCM

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

The idea behind DLH Holdings Corp and Paycor HCM 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.