Correlation Between ASURE SOFTWARE and RTL Group

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

By analyzing existing cross correlation between ASURE SOFTWARE and RTL Group SA, you can compare the effects of market volatilities on ASURE SOFTWARE and RTL Group 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 ASURE SOFTWARE with a short position of RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASURE SOFTWARE and RTL Group.

Diversification Opportunities for ASURE SOFTWARE and RTL Group

-0.34

Correlation Coefficient

ASURE SOFTWARE  RTL Group

Very good diversification

The 3 months correlation between ASURE and RTL is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ASURE SOFTWARE and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA and ASURE SOFTWARE 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 ASURE SOFTWARE are associated (or correlated) with RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of ASURE SOFTWARE i.e., ASURE SOFTWARE and RTL Group go up and down completely randomly.

Pair Corralation between ASURE SOFTWARE and RTL Group

Assuming the 90 days trading horizon ASURE SOFTWARE is expected to generate 8.47 times less return on investment than RTL Group. In addition to that, ASURE SOFTWARE is 1.91 times more volatile than RTL Group SA. It trades about 0.02 of its total potential returns per unit of risk. RTL Group SA is currently generating about 0.27 per unit of volatility. If you would invest  2,690  in RTL Group SA on December 26, 2024 and sell it today you would earn a total of  920.00  from holding RTL Group SA or generate 34.2% return on investment over 90 days.

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

ASURE SOFTWARE  vs.  RTL Group SA

ASURE SOFTWARE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ASURE SOFTWARE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

RTL Group SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RTL Group SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RTL Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASURE SOFTWARE and RTL Group

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

The idea behind ASURE SOFTWARE and RTL Group SA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.