Correlation Between Paycom Soft and Sungwoo Electronics

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

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

Diversification Opportunities for Paycom Soft and Sungwoo Electronics

-0.12

Correlation Coefficient

Paycom Soft  Sungwoo Electronics

Good diversification

The 3 months correlation between Paycom and Sungwoo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics and Paycom Soft 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 Soft are associated (or correlated) with Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of Paycom Soft i.e., Paycom Soft and Sungwoo Electronics go up and down completely randomly.

Pair Corralation between Paycom Soft and Sungwoo Electronics

Given the investment horizon of 90 days Paycom Soft is expected to generate 0.73 times more return on investment than Sungwoo Electronics. However, Paycom Soft is 1.37 times less risky than Sungwoo Electronics. It trades about 0.22 of its potential returns per unit of risk. Sungwoo Electronics Co is currently generating about -0.34 per unit of risk. If you would invest  21,112  in Paycom Soft on September 5, 2024 and sell it today you would earn a total of  1,876  from holding Paycom Soft or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

Paycom Soft  vs.  Sungwoo Electronics Co

Paycom Soft

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Paycom Soft exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sungwoo Electronics

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sungwoo Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sungwoo Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Paycom Soft and Sungwoo Electronics

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

The idea behind Paycom Soft and Sungwoo Electronics 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.