Correlation Between Paycom Soft and Myomo

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

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

Diversification Opportunities for Paycom Soft and Myomo

-0.64

Correlation Coefficient

Paycom Soft  Myomo

Excellent diversification

The 3 months correlation between Paycom and Myomo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Myomo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myomo Inc 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 Myomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myomo Inc has no effect on the direction of Paycom Soft i.e., Paycom Soft and Myomo go up and down completely randomly.

Pair Corralation between Paycom Soft and Myomo

Given the investment horizon of 90 days Paycom Soft is expected to generate 0.3 times more return on investment than Myomo. However, Paycom Soft is 3.36 times less risky than Myomo. It trades about 0.09 of its potential returns per unit of risk. Myomo Inc is currently generating about -0.04 per unit of risk. If you would invest  20,636  in Paycom Soft on December 27, 2024 and sell it today you would earn a total of  1,946  from holding Paycom Soft or generate 9.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Paycom Soft  vs.  Myomo Inc

Paycom Soft

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Paycom Soft may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Myomo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Myomo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Paycom Soft and Myomo

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

The idea behind Paycom Soft and Myomo Inc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.