Correlation Between Paycor HCM and Otonomo Technologies

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

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

Diversification Opportunities for Paycor HCM and Otonomo Technologies

-0.82

Correlation Coefficient

Paycor HCM  Otonomo Technologies

Pay attention - limited upside

The 3 months correlation between Paycor and Otonomo is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Paycor HCM and Otonomo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otonomo Technologies and Paycor HCM 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 Paycor HCM are associated (or correlated) with Otonomo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otonomo Technologies has no effect on the direction of Paycor HCM i.e., Paycor HCM and Otonomo Technologies go up and down completely randomly.

Pair Corralation between Paycor HCM and Otonomo Technologies

Given the investment horizon of 90 days Paycor HCM is expected to generate 0.56 times more return on investment than Otonomo Technologies. However, Paycor HCM is 1.79 times less risky than Otonomo Technologies. It trades about 0.01 of its potential returns per unit of risk. Otonomo Technologies is currently generating about -0.01 per unit of risk. If you would invest  2,326  in Paycor HCM on October 10, 2024 and sell it today you would lose (109.00) from holding Paycor HCM or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	26.01%
Values	Daily Returns

Paycor HCM  vs.  Otonomo Technologies

Paycor HCM

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paycor HCM are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Paycor HCM reported solid returns over the last few months and may actually be approaching a breakup point.

Otonomo Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Paycor HCM and Otonomo Technologies

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

The idea behind Paycor HCM and Otonomo 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.