Correlation Between Paycom Soft and Thor Explorations

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

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

Diversification Opportunities for Paycom Soft and Thor Explorations

-0.43

Correlation Coefficient

Paycom Soft  Thor Explorations

Very good diversification

The 3 months correlation between Paycom and Thor is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Thor Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Explorations 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 Thor Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Explorations has no effect on the direction of Paycom Soft i.e., Paycom Soft and Thor Explorations go up and down completely randomly.

Pair Corralation between Paycom Soft and Thor Explorations

Given the investment horizon of 90 days Paycom Soft is expected to under-perform the Thor Explorations. But the stock apears to be less risky and, when comparing its historical volatility, Paycom Soft is 1.45 times less risky than Thor Explorations. The stock trades about -0.04 of its potential returns per unit of risk. The Thor Explorations is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Thor Explorations on December 2, 2024 and sell it today you would earn a total of  8.00  from holding Thor Explorations or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Paycom Soft  vs.  Thor Explorations

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.

Thor Explorations

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Explorations are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Thor Explorations showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paycom Soft and Thor Explorations

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

The idea behind Paycom Soft and Thor Explorations 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.