Correlation Between Paycom Soft and Copper

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

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

Diversification Opportunities for Paycom Soft and Copper

-0.35

Correlation Coefficient

Paycom Soft  Copper

Very good diversification

The 3 months correlation between Paycom and Copper is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper 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 Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper has no effect on the direction of Paycom Soft i.e., Paycom Soft and Copper go up and down completely randomly.

Pair Corralation between Paycom Soft and Copper

Given the investment horizon of 90 days Paycom Soft is expected to under-perform the Copper. In addition to that, Paycom Soft is 1.57 times more volatile than Copper. It trades about -0.04 of its total potential returns per unit of risk. Copper is currently generating about 0.13 per unit of volatility. If you would invest  413.00  in Copper on December 2, 2024 and sell it today you would earn a total of  42.00  from holding Copper or generate 10.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Paycom Soft  vs.  Copper

Paycom Soft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paycom Soft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Paycom Soft is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Copper

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copper are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Paycom Soft and Copper

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

The idea behind Paycom Soft and Copper 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.