Correlation Between Paycom Soft and Global Self

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

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

Diversification Opportunities for Paycom Soft and Global Self

-0.13

Correlation Coefficient

Paycom Soft  Global Self

Good diversification

The 3 months correlation between Paycom and Global is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Global Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Self Storage 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 Global Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Self Storage has no effect on the direction of Paycom Soft i.e., Paycom Soft and Global Self go up and down completely randomly.

Pair Corralation between Paycom Soft and Global Self

Given the investment horizon of 90 days Paycom Soft is expected to under-perform the Global Self. In addition to that, Paycom Soft is 1.59 times more volatile than Global Self Storage. It trades about -0.04 of its total potential returns per unit of risk. Global Self Storage is currently generating about 0.07 per unit of volatility. If you would invest  500.00  in Global Self Storage on December 1, 2024 and sell it today you would earn a total of  23.00  from holding Global Self Storage or generate 4.6% return on investment over 90 days.

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

Paycom Soft  vs.  Global Self Storage

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.

Global Self Storage

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Self Storage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Global Self is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Paycom Soft and Global Self

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

The idea behind Paycom Soft and Global Self Storage 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.