Correlation Between PROS Holdings and PDF Solutions

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

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

Diversification Opportunities for PROS Holdings and PDF Solutions

0.16

Correlation Coefficient

PROS Holdings  PDF Solutions

Average diversification

The 3 months correlation between PROS and PDF is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PROS Holdings and PDF Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDF Solutions and PROS Holdings 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 PROS Holdings are associated (or correlated) with PDF Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDF Solutions has no effect on the direction of PROS Holdings i.e., PROS Holdings and PDF Solutions go up and down completely randomly.

Pair Corralation between PROS Holdings and PDF Solutions

Considering the 90-day investment horizon PROS Holdings is expected to generate 0.69 times more return on investment than PDF Solutions. However, PROS Holdings is 1.45 times less risky than PDF Solutions. It trades about -0.03 of its potential returns per unit of risk. PDF Solutions is currently generating about -0.11 per unit of risk. If you would invest  2,283  in PROS Holdings on December 26, 2024 and sell it today you would lose (165.00) from holding PROS Holdings or give up 7.23% of portfolio value over 90 days.

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

PROS Holdings  vs.  PDF Solutions

PROS Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PROS Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with PROS Holdings and PDF Solutions

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

The idea behind PROS Holdings and PDF Solutions 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.