Correlation Between Paycom Soft and New Nordic

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

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

Diversification Opportunities for Paycom Soft and New Nordic

0.39

Correlation Coefficient

Paycom Soft  New Nordic

Weak diversification

The 3 months correlation between Paycom and New is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and New Nordic Healthbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Nordic Healthbrands 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 New Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Nordic Healthbrands has no effect on the direction of Paycom Soft i.e., Paycom Soft and New Nordic go up and down completely randomly.

Pair Corralation between Paycom Soft and New Nordic

Given the investment horizon of 90 days Paycom Soft is expected to under-perform the New Nordic. But the stock apears to be less risky and, when comparing its historical volatility, Paycom Soft is 1.26 times less risky than New Nordic. The stock trades about -0.04 of its potential returns per unit of risk. The New Nordic Healthbrands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,500  in New Nordic Healthbrands on December 2, 2024 and sell it today you would earn a total of  140.00  from holding New Nordic Healthbrands or generate 9.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Paycom Soft  vs.  New Nordic Healthbrands

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.

New Nordic Healthbrands

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Nordic Healthbrands are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, New Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Paycom Soft and New Nordic

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

The idea behind Paycom Soft and New Nordic Healthbrands 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.