Correlation Between Payfare and Converge Technology
Can any of the company-specific risk be diversified away by investing in both Payfare and Converge Technology 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 Payfare and Converge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payfare and Converge Technology Solutions, you can compare the effects of market volatilities on Payfare and Converge Technology 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 Payfare with a short position of Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payfare and Converge Technology.
Diversification Opportunities for Payfare and Converge Technology
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Payfare and Converge is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Payfare and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology and Payfare 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 Payfare are associated (or correlated) with Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of Payfare i.e., Payfare and Converge Technology go up and down completely randomly.
Pair Corralation between Payfare and Converge Technology
Assuming the 90 days trading horizon Payfare is expected to under-perform the Converge Technology. In addition to that, Payfare is 1.8 times more volatile than Converge Technology Solutions. It trades about -0.05 of its total potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.03 per unit of volatility. If you would invest 450.00 in Converge Technology Solutions on August 28, 2024 and sell it today you would lose (113.00) from holding Converge Technology Solutions or give up 25.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payfare vs. Converge Technology Solutions
Performance |
| Timeline |
| Payfare |
| Converge Technology |
Payfare and Converge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payfare and Converge Technology
The main advantage of trading using opposite Payfare and Converge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payfare position performs unexpectedly, Converge Technology 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 Converge Technology will offset losses from the drop in Converge Technology's long position.The idea behind Payfare and Converge Technology 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.| Converge Technology vs. Dye Durham | Converge Technology vs. Docebo Inc | Converge Technology vs. Topicus | Converge Technology vs. goeasy |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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