Correlation Between Paycom Software and Kroger

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

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

Diversification Opportunities for Paycom Software and Kroger

0.09

Correlation Coefficient

Paycom Software  Kroger

Significant diversification

The 3 months correlation between Paycom and Kroger is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and Paycom 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 Paycom Software are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Kroger has no effect on the direction of Paycom Software i.e., Paycom Software and Kroger go up and down completely randomly.

Pair Corralation between Paycom Software and Kroger

Assuming the 90 days trading horizon Paycom Software is expected to under-perform the Kroger. But the stock apears to be less risky and, when comparing its historical volatility, Paycom Software is 1.01 times less risky than Kroger. The stock trades about -0.1 of its potential returns per unit of risk. The The Kroger Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  37,835  in The Kroger Co on December 23, 2024 and sell it today you would lose (576.00) from holding The Kroger Co or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Paycom Software  vs.  The Kroger Co

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.

The Kroger

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Kroger Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kroger is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Paycom Software and Kroger

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

The idea behind Paycom Software and The Kroger Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.