Correlation Between Paycom Software and Alfa Holdings

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

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

Diversification Opportunities for Paycom Software and Alfa Holdings

0.1

Correlation Coefficient

Paycom Software  Alfa Holdings

Average diversification

The 3 months correlation between Paycom and Alfa is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA 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 Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Paycom Software i.e., Paycom Software and Alfa Holdings go up and down completely randomly.

Pair Corralation between Paycom Software and Alfa Holdings

Assuming the 90 days trading horizon Paycom Software is expected to generate 1.1 times more return on investment than Alfa Holdings. However, Paycom Software is 1.1 times more volatile than Alfa Holdings SA. It trades about 0.16 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about 0.02 per unit of risk. If you would invest  3,121  in Paycom Software on September 15, 2024 and sell it today you would earn a total of  1,469  from holding Paycom Software or generate 47.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Paycom Software  vs.  Alfa Holdings SA

Paycom Software

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Software are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Paycom Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Alfa Holdings SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Holdings SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Paycom Software and Alfa Holdings

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

The idea behind Paycom Software and Alfa Holdings SA 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.