Correlation Between Performant Financial and Network 1

Can any of the company-specific risk be diversified away by investing in both Performant Financial and Network 1 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 Performant Financial and Network 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Performant Financial and Network 1 Technologies, you can compare the effects of market volatilities on Performant Financial and Network 1 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 Performant Financial with a short position of Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performant Financial and Network 1.

Diversification Opportunities for Performant Financial and Network 1

0.13

Correlation Coefficient

Performant Financial  Network 1

Average diversification

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

Pair Corralation between Performant Financial and Network 1

Given the investment horizon of 90 days Performant Financial is expected to generate 0.91 times more return on investment than Network 1. However, Performant Financial is 1.1 times less risky than Network 1. It trades about -0.02 of its potential returns per unit of risk. Network 1 Technologies is currently generating about -0.03 per unit of risk. If you would invest  340.00  in Performant Financial on September 1, 2024 and sell it today you would lose (26.00) from holding Performant Financial or give up 7.65% of portfolio value over 90 days.

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

Performant Financial  vs.  Network 1 Technologies

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Performant Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Network 1 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network 1 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Network 1 is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Performant Financial and Network 1

The main advantage of trading using opposite Performant Financial and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performant Financial position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind Performant Financial and Network 1 Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.