Correlation Between Idex Biometrics and Paycor HCM

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

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

Diversification Opportunities for Idex Biometrics and Paycor HCM

-0.44

Correlation Coefficient

Idex Biometrics  Paycor HCM

Very good diversification

The 3 months correlation between Idex and Paycor is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Idex Biometrics ASA and Paycor HCM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycor HCM and Idex Biometrics 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 Idex Biometrics ASA 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 Idex Biometrics i.e., Idex Biometrics and Paycor HCM go up and down completely randomly.

Pair Corralation between Idex Biometrics and Paycor HCM

Given the investment horizon of 90 days Idex Biometrics ASA is expected to under-perform the Paycor HCM. In addition to that, Idex Biometrics is 1.92 times more volatile than Paycor HCM. It trades about -0.04 of its total potential returns per unit of risk. Paycor HCM is currently generating about -0.01 per unit of volatility. If you would invest  2,382  in Paycor HCM on August 31, 2024 and sell it today you would lose (576.00) from holding Paycor HCM or give up 24.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.45%
Values	Daily Returns

Idex Biometrics ASA  vs.  Paycor HCM

Idex Biometrics ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idex Biometrics ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Idex Biometrics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Paycor HCM

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paycor HCM are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Paycor HCM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Idex Biometrics and Paycor HCM

The main advantage of trading using opposite Idex Biometrics and Paycor HCM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idex Biometrics 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 Idex Biometrics ASA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.