Correlation Between PDF Solutions and CoreCard Corp

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

By analyzing existing cross correlation between PDF Solutions and CoreCard Corp, you can compare the effects of market volatilities on PDF Solutions and CoreCard Corp 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 PDF Solutions with a short position of CoreCard Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDF Solutions and CoreCard Corp.

Diversification Opportunities for PDF Solutions and CoreCard Corp

0.33

Correlation Coefficient

PDF Solutions  CoreCard Corp

Weak diversification

The 3 months correlation between PDF and CoreCard is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PDF Solutions and CoreCard Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCard Corp and PDF Solutions 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 PDF Solutions are associated (or correlated) with CoreCard Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCard Corp has no effect on the direction of PDF Solutions i.e., PDF Solutions and CoreCard Corp go up and down completely randomly.

Pair Corralation between PDF Solutions and CoreCard Corp

Given the investment horizon of 90 days PDF Solutions is expected to generate 13.53 times less return on investment than CoreCard Corp. But when comparing it to its historical volatility, PDF Solutions is 1.47 times less risky than CoreCard Corp. It trades about 0.04 of its potential returns per unit of risk. CoreCard Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,789  in CoreCard Corp on September 20, 2024 and sell it today you would earn a total of  379.00  from holding CoreCard Corp or generate 21.19% return on investment over 90 days.

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

PDF Solutions  vs.  CoreCard Corp

PDF Solutions

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PDF Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PDF Solutions is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CoreCard Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCard Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, CoreCard Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PDF Solutions and CoreCard Corp

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

The idea behind PDF Solutions and CoreCard Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.