Correlation Between Metalfrio Solutions and Paycom Software

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

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

Diversification Opportunities for Metalfrio Solutions and Paycom Software

-0.7

Correlation Coefficient

Metalfrio Solutions  Paycom Software

Excellent diversification

The 3 months correlation between Metalfrio and Paycom is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Metalfrio Solutions SA and Paycom Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycom Software and Metalfrio Solutions 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 Metalfrio Solutions SA are associated (or correlated) with Paycom Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycom Software has no effect on the direction of Metalfrio Solutions i.e., Metalfrio Solutions and Paycom Software go up and down completely randomly.

Pair Corralation between Metalfrio Solutions and Paycom Software

Assuming the 90 days trading horizon Metalfrio Solutions SA is expected to generate 2.81 times more return on investment than Paycom Software. However, Metalfrio Solutions is 2.81 times more volatile than Paycom Software. It trades about 0.09 of its potential returns per unit of risk. Paycom Software is currently generating about -0.06 per unit of risk. If you would invest  22,100  in Metalfrio Solutions SA on December 25, 2024 and sell it today you would earn a total of  4,901  from holding Metalfrio Solutions SA or generate 22.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Metalfrio Solutions SA  vs.  Paycom Software

Metalfrio Solutions

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metalfrio Solutions SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Metalfrio Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Paycom Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paycom 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.

Pair Trading with Metalfrio Solutions and Paycom Software

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

The idea behind Metalfrio Solutions SA and Paycom Software 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.