Correlation Between Paycom Soft and Wilmar International

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

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

Diversification Opportunities for Paycom Soft and Wilmar International

0.31

Correlation Coefficient

Paycom Soft  Wilmar International

Weak diversification

The 3 months correlation between Paycom and Wilmar is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International 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 Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of Paycom Soft i.e., Paycom Soft and Wilmar International go up and down completely randomly.

Pair Corralation between Paycom Soft and Wilmar International

Given the investment horizon of 90 days Paycom Soft is expected to generate 1.05 times less return on investment than Wilmar International. But when comparing it to its historical volatility, Paycom Soft is 1.12 times less risky than Wilmar International. It trades about 0.07 of its potential returns per unit of risk. Wilmar International Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  211.00  in Wilmar International Limited on December 29, 2024 and sell it today you would earn a total of  16.00  from holding Wilmar International Limited or generate 7.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Paycom Soft  vs.  Wilmar International Limited

Paycom Soft

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 5 (%) 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.

Wilmar International

Risk-Adjusted Performance

Modest

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

Pair Trading with Paycom Soft and Wilmar International

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

The idea behind Paycom Soft and Wilmar International Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.