Correlation Between PDF Solutions and VTEX

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

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

Diversification Opportunities for PDF Solutions and VTEX

0.69

Correlation Coefficient

PDF Solutions  VTEX

Poor diversification

The 3 months correlation between PDF and VTEX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PDF Solutions and VTEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTEX 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 VTEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTEX has no effect on the direction of PDF Solutions i.e., PDF Solutions and VTEX go up and down completely randomly.

Pair Corralation between PDF Solutions and VTEX

Given the investment horizon of 90 days PDF Solutions is expected to under-perform the VTEX. But the stock apears to be less risky and, when comparing its historical volatility, PDF Solutions is 1.02 times less risky than VTEX. The stock trades about -0.11 of its potential returns per unit of risk. The VTEX is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  588.00  in VTEX on December 26, 2024 and sell it today you would lose (96.00) from holding VTEX or give up 16.33% of portfolio value over 90 days.

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

PDF Solutions  vs.  VTEX

PDF Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days PDF Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

VTEX

Risk-Adjusted Performance

Very Weak

Over the last 90 days VTEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PDF Solutions and VTEX

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

The idea behind PDF Solutions and VTEX 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.